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When Companies Are Just Lip Service

There is no going back. The world has become aware that climate change is a real threat. Companies and organizations, in a race against the clock to stop global warming , are now competing to see who is more environmentally conscious. They have no alternative: consumers and investors demand it.

However, in a world where appearance is sometimes more important than being, it is a good idea to separate the wheat from the chaff. Various brands of multiple sectors have been identified by resorting to a not ethical practice that has been dubbed greenwash-ing green or washed (picture).

Its objective is to whiten or make up as sustainable the environmental and social repercussions of an organization in the elaboration of its products or services. As the Greenpeace campaign manager, Miguel Ángel Soto, sums up, “a part of the companies are using the ecological transition and decarbonisation as a slogan”.

The most problematic greenwashing arises, according to Mariano Reaño, spokesman for the Network of Lawyers for Environmental Defense (RADA), “from the difficult fit of large corporations, oriented towards their shareholders, with respect for practices that are harmful to the environment, whose observance can have a decisive influence on the income statement ”.

The rise of this laundering occurs, says Reaño, “because it is pressing to sell oneself as green in the face of greater awareness in society.”

The US claims leadership in the climate fight, but the EU remains ahead
Failing to succeed in the battle to slow the pace of global warming, the European Commission’s General Directorate , Climate Action , points to a world “with repeated heat waves, droughts, floods and extreme weather events.”

Hence the urgency to comply with the commitments of the United Nations 2030 Agenda and advance in the 17 sustainable development goals (SDG) , as well as those of the Paris Agreement to limit the increase in temperature to 1.5 ºC.

Advertising campaigns
In this context, lawyers, environmental scientists and environmental organizations urge entities with a tendency to greenwashing to “abandon cosmetics” and comply with international agreements in reducing their emissions .

A message that also comes from Europe in the face of the proliferation of communications and millionaire advertising campaigns pseudo-friendly with the environment and aligned with a false labeling of the bio, eco or 100% natural type.

As an example, the screening or sweeping of websites in the fashion, beauty and household goods sectors carried out by the European Commission. In it, he concludes that “half of his ecological claims are unfounded” and raises “exaggerated, false or misleading” claims to 42%.

Europe will shield its objectives in the fight against climate change in a law
But for many organizations, adhering to all these international commitments is something that has a full impact on their business models. “These are deeply affected in the transition to an economy with zero net emissions,” says sustainable finance expert Maite Gómez-Angulo. And although most companies have “a roadmap for their transition” , the truth is that “they have to believe it.”

And in addition to creating value for the shareholder, Gómez-Angulo underlines that “they have to create economic, social and environmental value. SMEs included ”. “That’s why so everyone juggles so it looks like your business is closely aligned with the objectives ODS, causing it to fall into the temptation of the green-washing ” says this expert.

The Non-Financial Information Law (11/2018) obliges, as of this year, companies with more than 250 employees to include a statement of non-financial information in their account report. It should reflect the impact of its activity on environmental and social issues, personnel and respect for human rights, and its fight against corruption and bribery.

Although it is the most advanced law in Europe, “it is failing to monitor its compliance,” according to the coordinator of the Observatory for Corporate Social Responsibility, Orencio Vázquez. In his opinion, the information presented by companies refers to good practices and is far from how they manage all these sustainable parameters.

“Thus a greenwashing is incurred vis-à-vis the investor, who lacks this information and its impact on the income statement ”.

In order to avoid the laundering of the environmental image, the CEO of the sustainable management company DPAM, Hugo Lasat, believes that the investor should “evaluate the credibility of the company’s programs taking into account the products and services it offers.” As an investor, “the SDGs can be used to identify companies that are making an impactful contribution with their products and services,” he adds.

For the expert Gómez-Angulo, the obligation required by this law to reel off green purposes and the impact of activity in the social and environmental sphere “has its lights and shadows” because “although it gets companies to rethink their business models, many run the risk of doing it to cover the file ”.

And he warns that “although the regulator asks for a photo of the carbon footprint at the moment, the trend indicates that the company will have to explain what it does to improve,” with continuous monitoring of its measures and deadlines. If it is found that there is no progress, there will be higher requirements, fines, taxes or capital provisions for those who do not comply, which will make this malpractice of corporate greenwashing more difficult .

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