Transparency is Key

ESG reporting is on the rise, and so are concerns about greenwashing.


What is Greenwashing?

Greenwashing is a term used for when a corporation misleads its consumers, through reporting, product information, sustainability claims or commitments, making the firm appear environmentally and socially conscious without the necessary proof to back it up.

Legal Action

Stakeholders are now demanding ESG reporting and action from nearly all organizations in every sector. It is becoming less acceptable for companies to do the bare minimum–like setting long-term sustainability goals without actionable steps accompanying them, or denying accountability for practices further down its supply chain. And with sustainability practices increasingly on full display, it is imperative that companies do more than make frivolous claims about how they are helping the planet, or they may risk legal action. Canada Goose and Allbirds are just two of the latest brands facing lawsuits over ethical and sustainability-related claims.

It’s becoming clear that entities can no longer simply state their sustainability goals or long-term targets. Stakeholders want to see companies produce detailed transition action plans, backed by data and shorter-term interim targets, which demonstrate strong commitments toward a more sustainable future.

Lori Shapiro, S&P Global

Transparency: The Solution

So how does your firm avoid greenwashing and possible subsequent legal action? Transparency. Stakeholders do not expect companies to be perfect, but they do expect them to be truthful. When analyzing and reporting ESG data it is important to accurately state where the organization currently stands, its long and short-term goals, the metrics, benchmarks, and frameworks it is using, and the initiatives it will implement to reach its goals. Obtaining external ESG assurance is also a great way of enhancing your firm’s credibility.

How Can AI Help?

Artificial Intelligence can centralize and streamline ESG data collection, analytics, and reporting so your firm can focus on what really matters–taking action. Not only will it save the company time and money, but automation will also ensure accurate and secure data and more timely reporting. This will help companies stay up to date with current ESG trends, quickly address problems in the firm, and produce reports with integrity.

Shapiro, L., Wilkins, M., Yen, A. (2021, August 23). To Mitigate Greenwashing Concerns, Transparency And Consistency Are Key. Retrieved October 11, 2021, from https://www.spglobal.com/ratings/en/research/articles/210823-the-fear-of-greenwashing-may-be-greater-than-the-reality-across-the-global-financial-markets-12074863

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