Greenwashing under the microscope

CO2 Markets & Reforestation

Greenwashing under the microscope

The for sustainability claims are based on three principles: claims must be current and factually correct, they must be concretely substantiated and that substantiation must be understandable and imitable. In the guideline, the AFM explains the three principles in detail and provides examples of good and bad behavior. Those examples should help organizations report as fairly and accurately as possible on their sustainability behavior.

The AFM publishes its guidance at a time when companies are increasingly under fire for greenwashing, either pretending to be more sustainable than something or someone actually is. For example, this week it came out that the environmental organization Opportunity Green is suing some cruise lines. The cruise organizations label ships on liquefied natural gas as ‘climate-friendly’, while this is not in line with the truth. An Austrian court also recently filed charges against Australian Airlines, which would wrongly label its flights as CO2-neutral.

European legislation

Earlier this year, the Directive on Green Claims was published, a European Union legislation that requires companies to substantiate their sustainability claims. Once that law officially comes into force, companies will need to report to a local authority on the background of sustainability claims they make about their products or services. Terms such as ‘environmentally friendly’ and ‘climate neutral’ must then be accompanied by a factual and imitable explanation. It is conceivable that in the Netherlands the AFM will play that controlling role.

“Companies must provide clear, accurate and substantiated information to support their claims,” Stefano Cucurachi, associate professor of industrial ecology at the University Members, previously told Change Inc. “This includes disclosing the environmental benefits, substantiating the claims with relevant and reliable scientific evidence, and using standardized methods for measuring and assessing the environmental performance of companies’ products or services.”

Read the earlier article on greenwashing and the Directive on Green Claims here.

Consultation

The guideline has been adjusted after a consultation of the AFM. Seven industry associations responded with feedback. The most important adjustment was the addition of so-called good practices; examples of parties that properly substantiate a sustainability claim. It has also been added that companies can test the comprehensibility of their claims with consumers. Comprehensibility is an important element of sustainability claims, since the main purpose of combating greenwashing is to allow consumers to make an informed choice. Willemijn van Dolen, professor of marketing at the University of Amsterdam, previously told Change Inc. about this: “The scientific literature shows that people are becoming increasingly aware of the role that companies have in climate problems. They also expect companies to adapt and take their responsibility. Otherwise, they feel like they’re on their own, and that’s stopping them from taking action.”

 

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