Professor Michael Lennox on how companies must integrate environmental sustainability as a core value in their mission
The term ‘Greenwashing’ pre-dates the ‘Fake News’ era by over 20 years. But it has a lot in common. It’s about creating a false impression to gain a strategic advantage. From multinationals to political parties, presenting a ‘green’ environmentally friendly public image, and failing to live up to it, has been the root of much public scepticism.
The agreement reached this month at the Katowice Climate Conference on the ‘rulebook’ for putting the 2015 Paris agreement into practice should be a sign for businesses to step up to the plate and embrace environmental sustainability unconditionally.
The Volkswagen diesel emissions scandal was a textbook case of greenwashing — specific claims were made which turned out to be false. However, according to Professor Michael Lenox, Senior Associate Dean and Chief Strategy Officer at Darden School of Business, most cases aren’t nearly as straightforward. In fact, besides a few clear-cut examples, greenwashing is largely in the eye of the beholder.
“Intent is central, and it’s very hard to prove intent,” explains Lenox, who specializes in the intersection of business strategy and public policy as it relates to the environment. Proving intent — whether a company’s efforts to become more environmentally friendly are authentic or conscious greenwashing — is very hard without access to boardroom minutes.
BP’s attempts to be more environmentally conscious and safe after the Deepwater Horizon oil spill could be the catalyst for real corporate culture change or just a superficial way to bolster its tainted brand. Consumers and activists having no real way of knowing tend to be sceptical. This has led some businesses to avoid advertising good-faith green efforts for fear they’ll be accused of greenwashing.
“Some companies, like chemical companies, have a greater environmental impact because of the nature of their industries,” says Lenox. “Consequently, those firms naturally come under greater scrutiny in this area.” Yet we all need chemicals as we all need oil. The question should be what kind and how much? And how does one company compare to others in the same industry?
For example, an oil company that is genuinely innovating to make its existing hydrocarbon fields greener and is diversifying into renewable energy and electricity storage will still remain a major source of carbon pollution. And while its efforts to seek a greener future will be good brand PR, if they are authentic, they should not be classified as greenwashing.
Research shows that customers are far less influenced by whether a product is green than by its desirability and price. Consequently, Lenox focuses on the need to encourage genuine sustainable practices and innovations while delivering products that consumers really want to buy, with the result that everyone — the consumer, the producer and the environment — ‘wins’.
It is important that companies balance pressures from activists, governments and the public to abide by an environmental ethic — while not greenwashing their efforts. Business leaders should get beyond superficial greenwashing and seek to integrate sustainability as a core value in their mission — taking an ‘inside out’, rather than an ‘outside in’, approach — which says Lennox “Is the key to all lasting change, not only in individual businesses, but across society as a whole.”
He offers several solutions for spurring the kind of sustainability practices and innovations from which everyone wins, including:
Information and standard setting
The information shared between producers and consumers should be clear and transparent so consumers can know when their purchases are sustainably produced. This is done, in part, by standard setting, which offers consumers credible backing for claims. Standard setting also helps companies by giving them a code of conduct to shoot for — a concrete, measurable set of environmentally responsible behaviours to follow — and to promote to consumers without worrying they’ll be accused of greenwashing.
Working with activists
Environmental activists are usually viewed as adversaries who aim to shame companies for their non-green practices, taking to social media to expose bad practice and to apply pressure for companies to change their ways.
Yet if businesses can find ways to partner with NGOs and activists, change can happen that benefits both sides. McDonald’s collaboration with the Environmental Defence Fund to replace its Styrofoam containers with recycled paper products is an early example of this kind of partnership.
Governments can encourage sustainable innovation and practice through tax incentives, subsidies and penalties for ‘dirty’ technology. However, with new alternative technologies emerging all the time along with a new understanding of what is and isn’t ‘green’, government must be careful. The UK government’s intervention to support diesel rather than petrol cars in the 1990s now appears to have been environmentally damaging and a big mistake.
This article includes extracts from an article originally published by Darden Ideas in Action
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