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A recent report from ³ÉÈËÓ°Òô, Implementing the E of ESG: why in-house lawyers are instrumental, shows that action on climate change has become an urgent business priority. The report, published in collaboration with Lawyers for Net Zero, found that lawyers feel strongly that they can play a pivotal role to play in effecting change.

Neil Campbell, Managing Legal Counsel at NatWest, sums it up neatly: ‘It's not someone else’s problem, it’s not just for ESG specialists, it’s for all of us.’

One area noted as a concern in the report is . Greenwashing recently hit headlines with the Deutsche Bank scandal, which saw police raid the bank’s headquarters after the bank allegedly sold investment products worth $1tn, overstating the environmental friendliness of the product. Many other organisations have been accused of greenwashing, ranging from to Keurig’s misleading recycling claims.

Greenwashing is unethical, harmful, and can lead to huge reputational damage. In this article, I explore greenwashing in detail and discuss how in-house lawyers can help their companies avoid claims of greenwashing by communicating directly with marketing and product leads.

What exactly is greenwashing?

The ³ÉÈËÓ°Òô report mentioned above defined greenwashing as follows: ‘The practice of making people believe through marketing and PR that a company and/or its products is more environmentally friendly or sustainable than it really is.’

Greenwashing was once a casually exploited loophole, a way for organisations to boast their sustainability claims through selective reporting. But an increasing awareness from consumers and campaigners has shone a much-needed light on environmental claims.

And the light is shining everywhere. Consider the last few weeks. Activists accused a of exploiting loopholes in a global climate pledge. paused their use of a tool to measure sustainability after criticisms over skewed methodology. Each is an example of greenwashing. And that is just the last few weeks.

Governments are taking notice, both nationally and internationally. The that greenwashing will increase the risk of a disorderly transition to net zero. The UK Treasury has established a taskforce that will set standards for companies’ net zero transition disclosure, with the direct intention to ‘tackle greenwashing’. The European Commission has proposed stricter consumer and environmental regulations to prevent greenwashing.

The spotlight is on companies. Consumers expect honest information about the green credentials of the products they buy and in-house counsel can help companies meet that task.

How can in-house counsel prevent greenwashing?

Neil Campbell from NatWest says: ‘Having the right level of risk [around greenwashing] means getting the right people focused, it’s not a niche area. It must be part of the operating rhythm of the business.’ It’s clear that in-house counsel need to be aware of greenwashing, but that awareness needs to be consistent. In the ³ÉÈËÓ°Òô report, senior counsel noted that they could mitigate the greenwashing risk by working closely and collaborating with teams across the company.

In-house counsel can work with sales, marketing, product, public relations, and other teams to deliver guidance and training on the specific issue. That process should start as early as possible, with clear instructions to prioritise , climate policies, and products.

In-house counsel can help their business to:

• Back up sustainability and environmental claims with robust data
• Ensure fair comparisons with other brands or organisations
• Make claims clear and easy to understand, without misleading measurements
• Ensure important information is not omitted in efforts to paint a selective picture
• Avoid the use of misleading visual claims on labels or advertisements
  

In-house counsel can also encourage innovation and promote ESG and climate change initiatives. The best way to prevent greenwashing is to genuinely embrace the green, to actually practice environmental friendliness, to actually become a leader in the fight against climate change and prepare the business for the transition to net zero.

In-house counsel should make the benefits of business sustainability clear. The ³ÉÈËÓ°Òô report, for example, argued that there is now a clear correlation between how companies score on environmental, social, and governance (ESG) issues and their longer-term financial health, with high-performing companies seeing benefits to brand, reputation, and employee engagement. In a similar vein, the , suggesting green efforts positively impact on company performance.

The companies driving positive change should publicise that to full effect. The organisations meeting ESG targets, the ones doing their part in tackling climate change, the ones pushing innovative green initiatives, should talk about it, advertise it, and indeed profit from it. In an ideal world, in-house counsel should explain the risk of greenwashing, make the business case for green initiatives, and lead companies forward in the .

Download our report for practical advice from leading General Counsel on driving ESG and climate change initiatives.

³ÉÈËÓ°Òô helps legal teams access the technical expertise they need on ESG and climate change, so that they can providing guidance for their business. Our sustainable business toolkit cuts through the vast amount of information in this area, pulling together major issues by practice area and sector and tracking the key developments.

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