Choosing a sustainability framework

Transparency, Ethics, and the Environment: A Guide to Avoiding Greenwashing

Transparency, Ethics, and the Environment: A Guide to Avoiding Greenwashing

As consumers become increasingly concerned about the environment, businesses are under more pressure to demonstrate their commitment to sustainability. All in all, this is a positive development that is driving real change. Case and point—90% of companies on the S&P500 published a CSR report in 2021 (up from 20% in 2011).

 

However, while many companies are genuinely focused on reducing their environmental impact, some are engaging in “greenwashing”—using false or misleading claims to make products and services appear more sustainable than they actually are.

 

This Sandpaper guide will explain what greenwashing is and provide tips for consumers and businesses on how to avoid it. We’ll also discuss why transparency and ethical practices are so important for truly sustainable businesses.

What Is Greenwashing?

Greenwashing is the practice of misrepresenting or exaggerating the environmental benefits of a product, service, or company—often using vague, misleading language such as “eco-friendly,” “all-natural,” and “carbon-neutral.” Companies use greenwashing to make their products appear more sustainable than they actually are.

 

Unfortunately, greenwashing is all too common and can cause consumers to purchase unsustainable products without realizing it. It also undermines the efforts of businesses that are genuinely committed to sustainability. That’s why it’s essential for both consumers and companies to be aware of how to identify greenwashing and how to avoid it.

The Risks of Greenwashing for Businesses

Greenwashing is a harmful practice for businesses as well as consumers. While the harm consumers and the environment face are much discussed, the risks companies take on when engaging in greenwashing are often overlooked.

 

These include:

 

  • Fines & Legal Action: Companies that engage in greenwashing can face fines and legal action if they are found to be in violation of consumer protection laws. This can result in financial penalties and damage to the company’s reputation.
  • Loss of Consumer Trust: Greenwashing can erode consumer trust in a company, especially if they feel misled or deceived by false or exaggerated environmental claims. This can lead to a decline in sales and damage to the company’s reputation.
  • Reputational Damage: Engaging in greenwashing can also result in reputational damage for a company, which can be difficult to repair. Negative media coverage and public backlash can harm a company’s brand and make it more difficult to attract customers and investors.

How To Avoid Greenwashing

1. Comply with Relevant Regulations & Standards

To ensure that businesses operate sustainably, they must comply with regulations and standards related to sustainability, such as those for waste disposal, energy usage, and emissions. 

Companies should not only comply with these regulations and standards but also aim to exceed them to positively impact the environment. In addition, companies can proactively monitor and stay up-to-date with new sustainability regulations and standards that may be introduced in the future.

2. Conduct Honest & Transparent Assessments of Environmental Practices

Companies should conduct honest and transparent assessments of their environmental practices, including their carbon footprint and waste management. It is important to recognize that these assessments are not just for compliance purposes, but also for identifying areas of improvement. By being open and transparent about their environmental impact, companies can gain the trust and support of their consumers and stakeholders.

 

Take Patagonia, for example—the outdoor clothing company regularly updates the Our Footprint report, detailing its environmental impact and efforts to reduce it. The report doesn’t just show the good, but also the bad (and even ugly), featuring troubling facts such as, “39% of Patagonia factory workers earn a living wage”.

 

Transparency is a great motivator, and Patagonia’s consistent ESG progress is a testament to that fact.

3. Use Third-Party Certifications & Audits

Companies can use third-party certifications and audits to demonstrate their commitment to sustainability. These certifications and audits objectively evaluate a company’s environmental practices, which can be helpful in identifying areas for improvement. There are quite a few  certifications and audits that companies can use, such as:

By obtaining such certifications and audits, companies can demonstrate their commitment to sustainability to their stakeholders and gain a competitive advantage in the market.

4. Provide Concrete Evidence of Sustainability Efforts

Companies should provide concrete evidence of their sustainability efforts. This includes data on energy usage and waste reduction, as well as case studies and success stories. For example, Unilever’s Sustainable Living Plan (2010-2020) included specific targets for reducing waste and greenhouse gas emissions.

 

Sustainability reports are a great way for companies to showcase the progress they’ve made in their sustainability efforts, while also providing a roadmap for future improvement. These reports typically include data on environmental impact, as well as information on the company’s sustainability goals and initiatives. By sharing this information with stakeholders, companies can build trust and demonstrate their commitment to sustainability.

5. Engage with Stakeholders and Address Their Concerns

Companies should engage with stakeholders and address their concerns about environmental practices. This includes customers, investors, and community members. Companies can build trust and improve their sustainability practices by listening to and incorporating stakeholder feedback.

 

For example, Coca-Cola addressed concerns about water usage by setting a goal to replenish 100% of the water used in its beverages and production processes. As a result, the company has replenished more than 200 billion liters of water to communities in need.

Reporting ESG Matters Ethically

Greenwashing can have serious consequences for businesses, as well as for the environment. Companies can avoid greenwashing by understanding relevant regulations and standards, conducting honest assessments of their practices, and using third-party certifications and audits.

 

Additionally, communicating sustainability ethically requires avoiding vague or misleading claims, highlighting concrete actions and achievements, and engaging with stakeholders. By taking these steps, companies can demonstrate their commitment to sustainability and build trust with customers and stakeholders.

 

Sandpaper is an agency based in Dubai that specializes in creating informative and inspiring sustainability reports for brands and businesses. Contact us today to learn more about how we can help your company showcase its commitment to sustainability in a transparent and ethical manner.



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Transparency, ethics and the environment

GRI vs. SASB Indicators: Everything You Need To Know

GRI and SASB are responsible for two of the most widely used sustainability reporting frameworks. They monitor the performance of publicly traded companies on different sustainability parameters and are used by investors to evaluate a company’s long-term value.

Both frameworks have their own specific sets of indicators that provide crucial insights into a company’s performance in terms of social, environmental, and economic activities.

In this Sandpaper guide, we’ll look at the differences between GRI and SASB indicators, understand their implications for businesses and investors, and explore how each set of indicators can be used to evaluate a company’s sustainability performance.

What Is GRI?

GRI stands for Global Reporting Initiative. Founded in 1999 by CERES, GRI is an independent, international organization that provides comprehensive sustainability reporting guidelines for organizations worldwide.

GRI vs. SASB Indicators: Everything You Need To Know
GRI vs. SASB Indicators: Everything You Need To Know

GRI’s Standards give companies a reporting framework that helps them report on economic, environmental, and social performance in a consistent and comparable way. These guidelines provide guidance on what information should be disclosed through a range of indicators—from a company’s finances to its environmental and social impact.

GRI Indicators

The complete list of GRI indicators includes:

IndicatorsDescription
General Standard Disclosures
102-1Company name
102-2Activities, brands, products, services
102-3Headquarters location
102-4Operations location
102-5Ownership, legal form
102-6Markets served
102-7Scale
102-8Employees and workers
102-9Supply chain
102-10Changes to org and supply chain
102-11Precautionary Principle
102-12External initiatives
102-13Association membership
102-14Statement from senior decision-maker
102-15Key impacts, risks, opportunities
102-16Values, principles, standards, norms
102-17Ethics advice and concerns
102-18Governance structure
102-19Delegating authority
102-20Executive responsibility for EES topics
102-21Consulting on EES topics
102-22Highest governance body and committees
102-23Chair of highest governance body
102-24Nominating and selecting highest governance body
102-25Conflicts of interest
102-26Purpose, values, strategy
102-27Collective knowledge of highest governance body
102-28Evaluating highest governance body’s performance
102-29Identifying and managing EES impacts
102-30Effectiveness of risk management processes
102-31Review of EES topics
102-32Highest governance body’s role in sustainability reporting
102-33Communicating critical concerns
102-34Nature and total number of critical concerns
102-35Remuneration policies
102-36Process for determining remuneration
102-37Stakeholders’ involvement in remuneration
102-38Annual total compensation ratio
102-39Percentage increase in annual total compensation ratio
102-40Stakeholder groups
102-41Collective bargaining agreements
102-42Identifying and selecting stakeholders
102-43Approach to stakeholder engagement
102-44Key topics and concerns raised
102-45Entities in consolidated financial statements
102-46Report content and topic boundaries
102-47Material topics
102-48Restatements of information
102-49Changes in reporting
102-50Reporting period
102-51Date of most recent report
102-52Reporting cycle
102-53Contact point for report questions
102-54Claims of reporting in accordance with GRI Standards
102-55GRI content index
102-56External assurance
103-1Material topic and boundary explanation
103-2Management approach and components
103-3Evaluation of management approach
Economic
201-1Direct economic value generated and distributed
201-2Climate change financial implications, risks, opportunities
201-3Defined benefit plan obligations and other retirement plans
201-4Financial assistance from the government
204-1The proportion of spending on local suppliers
205-1Corruption-risk assessed operations
205-2Anti-corruption policy communication and training
205-3Confirmed incidents of corruption and actions
206-1Anticompetitive behavior, antitrust, monopoly legal actions
Environmental
301-1Materials used by weight or volume
301-2Recycled input materials used
301-3Reclaimed products and packaging materials
302-1Energy consumption in org
302-2Energy consumption outside the org
302-3Energy intensity
302-4Reduction of energy consumption
302-5Reductions in energy requirements of products and services
303-1Interactions with water as a shared resource
303-2Water discharge impact management
303-3Water withdrawal
303-4Water discharge
303-5Water consumption
304-1Operational sites owned, leased, managed, or adjacent to protected areas and high biodiversity value
304-2Significant impacts of activities, products, and services on biodiversity
304-3Habitats protected or restored
305-1Direct GHG emissions
305-2Energy indirect GHG emissions
305-3Other indirect GHG emissions
305-4GHG emissions intensity
305-5Reduction of GHG emissions
305-6Ozone-depleting substances emissions
305-7Nitrogen oxides, sulfur oxides, and other significant air emissions
306-1Waste generation and significant waste-related impacts
306-2Management of significant waste-related impacts
306-3Waste generated
306-4Waste diverted from disposal
306-5Waste directed to disposal
307-1Non-compliance with environmental laws and regulations
308-1New suppliers screened using environmental criteria
308-2Negative environmental impacts in supply chain and actions
Social
402-1Minimum notice periods for operational changes
OHSOccupational health and safety
403-1Worker representation in formal joint management–worker health and safety committees
403-2Types of injury, rates of injury, occupational diseases, lost days, absenteeism, and work-related fatalities
403-3Workers with high incidence or risk of occupation-related diseases
403-4Health and safety topics in formal agreements with trade unions
404-1Average hours of training per year per employee
404-2Programs for upgrading employee skills and transition assistance programs
404-3Employees receiving regular performance and career development reviews
405-1Diversity of governance bodies and employees
405-2Basic salary and remuneration ratio of women to men
406-1Incidents of discrimination and corrective actions taken
407-1Operations and suppliers where freedom of association and collective bargaining may be at risk
408-1Operations and suppliers at significant risk for incidents of child labor
409-1Operations and suppliers at significant risk for incidents of forced or compulsory labor
412-1Operations subject to human rights reviews or impact assessments
412-2Employee human rights training
412-3Significant investment agreements and contracts with human rights clauses or screening
413-1Operations with local community engagement, impact assessments, and development programs
413-2Operations with significant negative impacts on local communities
414-1New suppliers screened using social criteria
414-2Negative social impacts in supply chain and actions
415-1Political contributions
416-1Assessment of health and safety impacts of product and service categories
416-2Non-compliance incidents concerning health and safety impacts of products and services
417-1Requirements for product and service information and labeling
417-2Non-compliance incidents concerning product and service information and labeling
417-3Non-compliance incidents concerning marketing communications
418-1Substantiated complaints concerning breaches of customer privacy and losses of customer data

What Is SASB?

The Sustainability Accounting Standards Board (SASB) is an independent, non-profit organization that develops industry-specific standards to help companies measure and disclose their material sustainability information in public filings.

GRI vs. SASB Indicators: Everything You Need To Know
GRI vs. SASB Indicators: Everything You Need To Know

Unlike GRI, which produces general guidelines for companies to report, SASB produces industry-specific standards tailored to each sector and company. This helps ensure that the information reported is relevant and useful for investors.

SASB Indicators

SASB indicators vary between industries. However, all SASB indicators are divided into two categories—environmental, which focuses on the impacts on natural resources, and social, which assesses a company’s impact on society.

Within these categories, SASB identifies specific topics that companies must address in their reporting. For instance, an energy company might be required to report on its greenhouse gas emissions, while a retail company might need to report on its labor practices.

SASB also provides guidance on how companies should disclose the information and how investors can evaluate it. This helps ensure that the reporting standards are consistent across industries, as well as providing clear guidance for both companies and investors.

GRI vs. SASB Indicators: Key Differences

When it comes to the disclosure of sustainability information, GRI and SASB vary in terms of the type of information they report and the format in which this data is presented.

Key differences include:

 GRISASB
PurposeProvides comprehensive sustainability reporting guidelines applicable across all industriesIndustry-specific standards focused on helping investors understand and measure companies’ environmental and social performance
FormatOrganized into topics, with qualitative and quantitative indicatorsMore granular, with detailed quantitative metrics for each sector
ScopeIncredibly broad, spanning economic, environmental, and social issues, with 80+ indicatorsFocused on key ESG factors that are considered “financially material” in each sector
AudienceIntended for a wide variety of stakeholders, including investors, customers, employees, and the publicMainly targeted at investors and other financial decision-makers

Purpose

GRI standards focus on providing comprehensive sustainability reporting guidelines that are applicable across all industries.

SASB’s standards, however, are industry-specific and focused more on helping investors understand and measure companies’ environmental and social performance.

Format

GRI’s framework is organized into topics, with indicators for each topic. The indicators themselves are both qualitative and quantitative—they provide a narrative description of the company’s performance and also use metrics like financial ratios.

SASB’s framework is more granular, providing detailed metrics for each sector. SASB’s indicators are mostly quantitative and provide specific metrics to assess companies’ performance across environmental, social, and governance (ESG) issues.

Scope

GRI’s scope is incredibly broad, spanning economic, environmental, and social issues. It covers a wide range of topics, from diversity to energy use. In total, there are 80+ indicators included.

SASB’s scope is more limited, focusing on certain key ESG factors that are considered “financially material” in each sector. This helps investors understand how companies manage the risks associated with their operations and make informed investment decisions.

Audience

GRI’s framework is designed to be applicable across all industries, so it is intended for a wide variety of stakeholders. This includes investors, customers, employees, and the public.

SASB’s standards are mainly targeted at investors and other financial decision-makers. Its focus on financially material ESG topics makes it more useful for companies looking to attract and retain sustainable investors.

Can GRI and SASB Be Used Together?

GRI and SASB can be used together to provide a more comprehensive view of a company’s sustainability performance.

By combining GRI’s qualitative and quantitative indicators with SASB’s industry-specific metrics, companies will have more detailed and reliable information to inform their decision-making and help them become better environmental stewards.

Companies that use both GRI and SASB standards can also benefit from improved transparency, accountability, and investor confidence. Ultimately, this will help them to make more informed decisions about their sustainability initiatives and create a positive impact on society.

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