ESG Newsletter – FY2023 Q1

Greenwashing Group Think

The start of 2023 sees sustainability at the top of businesses’ priority lists. A recent survey conducted in Q1 found that 71% of respondents ranked sustainability as their top near-term (next six months) priority.[1] Respondents were collectively optimistic about their progress, with over 90% suggesting they were somewhat or extremely successful in reaching their sustainability goals over the past 12 months. Further, they expressed increased optimism about meeting goals for the next year (72%) and for 2030 (77%).

But is this optimism warranted considering reports indicating ongoing credibility gaps between words and deeds regarding sustainability? Is there a collective greenwashing group think?

The UN report released before COP27 last November criticized many net-zero promises as little more than greenwashing. The reporting group chair, Catherine McKenna, stated, “Too many of these net-zero pledges are little more than empty slogans and hype.”[2] A recent report finding only 5% of FTSE 100 companies having credible decarbonization plans highlights that most companies performed well in the Foundation stage, in establishing objectives, priorities, interim targets, and milestones, but were weakest in the Implementation Strategy stage – including more detailed disclosure of short-, medium- and long-term actions to achieve their transition plan.[3] Collectively, these reports raise questions about whether companies’ talk on sustainability is matched by action.

The takeaway of these conflicting views is that when achieving sustainability goals, transparency and accountability remain critical but often lacking. Companies must match deeds to words better and provide the necessary disclosures to support their claims. Meanwhile, investors need better data and insights to assess businesses’ sustainability performance accurately.

 

By K.P. O’Reilly, Ph.D. – Principal Consultant

[1] Honeywell Environmental Sustainability Index, Q1 2023. Available online at https://futurumresearch.com/research-reports/honeywell-environmental-sustainability-index-q1-2023/
[2] “COP27 – Corporate climate pledges rife with greenwashing – U.N. expert group” Reuters. November 8, 2022. Available online at https://www.reuters.com/business/cop/un-experts-cop27-corporate-climate-pledges-rife-with-greenwashing-2022-11-08/
[3] “Only 5% of FTSE 100 Companies Have Published Credible Decarbonization Plans: EY”, ESG Today, April 4, 2023. Available online at https://www.esgtoday.com/only-5-of-ftse-100-companies-have-published-credible-decarbonization-plans-ey/

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