Communicating ESG while avoiding greenwashing

- [Narrator] With increasing focus put on ESG as a consideration factor for customers and investors, concerns around greenwashing are increasing rapidly. Greenwashing is a term used to describe misleading environmental claims about how green, sustainable or socially responsible a product, service, investment offering or a brand is by misrepresenting or overstating its qualifications. Greenwashing could be as simple as calling a product eco-friendly or green when this product causes significant harm to the environment. This could also be the case at the corporate level. For example, a corporation making a misleading carbon-neutrality claim, while there is no substantiating data to verify this claim. Regardless of the intentions, which could be a simple PR exercise that overstates a product greenness or a misinformed statement that a company leader makes publicly. Greenwashing has severe consequences including legal actions and fines. According to a survey conducted by PWC in 2021, 83% of consumers think companies should be actively shaping ESG best practices and are willing to pay a premium when they choose an investment, service or a product that is aligned with their values. ESG washing or greenwashing takes advantage of stakeholders who are made believe that they are making good choices for the environment and the society by choosing a brand that is not fully honest in its statements. The concerns are even higher when it comes to greenwashing or ESG washing in the field of sustainable or impact investing. Customers choose these investments options since they are looking for an aligned mission to make positive environmental and social impact while achieving financial returns through their capital. For example, a sustainable investment methodology may favor one area of impact while causing significant environmental or social concerns elsewhere, such as investing in companies with high carbon footprint, waste production or heavy pollution. This could also include social concerns with invested companies, such as human right violations or unfair pay. To avoid greenwashing, here are a few things to pay attention to. One, do not make written or verbal ESG claims publicly based on unverified information. Two, public statements should be clear, concise and data driven. This includes websites and standalone sustainably reports, not just financial statements. Three, coordinate written narrative around ESG efforts across all relevant departments, not just the sustainability department including legal, accounting and communications and marketing. I wanted to cover greenwashing in this introductory course ESG because it's important to pay close attention to your actions and statements to avoid greenwashing on day one. Also, I hope that you'll be informed and do your research when making sustainable purchasing or investing decisions instead of taking what you're communicated with on its face value.