Imagine being a public relations adviser and having to combat Greta Thunberg. She has truly mastered the art of the soundbite.
Her criticism that COP26 was just ‘blah blah blah’ was a clever cover-all response to combat any of the advances claimed by the politicians.
COP26’s last-minute stitched together final agreement underlined Thunberg’s view that big dirty industrial polluters and countries with poor environmental records will only respond to a big stick and that the stick isn’t nearly big enough yet.
A bigger regulatory stick for the big polluters
The public’s appetite for using a bigger stick is growing, however. Which is bad news for the big polluters. Especially those who spent so much time in the run-up to COP26 talking up their green credentials and and sustainable practices and products. Phrases like ‘clean coal’, ‘net-zero carbon flights’, ‘sustainable mining’, even ‘clean-burning natural gas’ swilled around like so much greenwash.
Those who invest in big polluting industries face a similar challenge.
Why? Because the lack of transparency is hindering consumer choice. For example, consumers know that switching to a sustainable pension could be 20 times more effective in cutting their carbon footprint than giving up flying, eating meat and driving a car with an internal combustion engine. Yet few know what to do about it or whether they can believe the sustainability claims of the companies their pensions are invested in.
An end to greenwash?
Regulators agree this is unacceptable. So tough new guidelines to tackle this are coming. Guidelines that will curb the ability of big industrial polluters to make sustainability claims that don’t stack up.
Regulatory changes will address claims that too many companies readily use terms about their environmental ‘impact’ and ‘zero carbon’ products that are either hard to verify or just cannot be true. In future, they’ll have to prove these claims.
Just one example, here in Switzerland, the main financial market regulator FINMA has issued draft regulations to tackle greenwashing in collective investment schemes at fund and institutional level. It hopes to end some of the worst abuses that it sees, mostly as a result of a lack of transparency in products offered to investors.
Claims about sustainability must in future be backed by evidence: proof that a sustainable investment strategy is actively being pursued or implemented, and that in any collective investment scheme a large share of assets must be allocated in line with that strategy.
FINMA is one of several significant regulators to be turning the screw on funds that can’t back up outlandish claims of their sustainability with hard evidence. ESG claims will have to be justified. Unwarranted ‘sustainability’ labels for products will have to be dropped.
A new global framework for sustainability reporting?
Underpinning all this regulation will be globally accepted sustainability reporting standards and a single internationally recognised framework for sustainability reporting.
The recently announced merger of the Sustainability Accounting Standards Board and the Climate Disclosure Standards Board (CDSB), to form a new International Sustainability Standards Board (ISSB) will help. It paves the way for a new global sustainability disclosure standards body to oversee the introduction of more transparent and globally comparable sustainability disclosures compatible with companies’ financial statements.
Proving deliberate mis-selling is hard when precise definitions of words like ‘sustainable’ or ‘green’ are a matter of debate. But new regulations mean this day is coming.
More transparency, less PR?
Greater transparency will ensure everyone understands how to make informed decisions about their pensions and investments. Fighting claims that what they say and do is all just ‘blah blah blah’ will require companies to change, and to show clearly that they have done so. That’ll good for investors and good for the planet.
What Greta might describe as a ‘win/win’ rather than ‘blah blah blah’.
Photo by Carlos Roso on Unsplash