The WSJ reported on Wednesday that Vodafone Group and Nestlé have set up panels of experts to double-check environmental claims before they appear on products and marketing in an effort to avoid allegations of greenwashing.

Vodafone’s panel includes the company’s chief external and corporate affairs officer, the company’s sustainability chief, and representatives from the legal, marketing and communications departments. Marketers present campaigns that they are working on to the group, take suggestions, make adjustments and eventually win approval.

If one panel member disagrees and marketers still want to press forward with the campaign, the panelist can escalate the concerns to Vodafone’s executive committee.

Among the issues the panel has reviewed are Vodafone’s 100% renewable-energy claim and its efforts to reduce waste from smartphones in partnership with nonprofit World Wide Fund for Nature.

Backed by data

Brand and marketing department employees need seek legal advice and sustainability advice to answer questions about their messaging, such as whether it’s it accurate and backed by data that prove the point.

In 2015, Nestlé started setting up panels to assess green claims in every market where it sells some of its more than 2,000 brands, according to a company spokeswoman who spoke to the WSJ. The packaged-foods company’s panels are staffed by employees from marketing, regulatory, scientific affairs, sustainability, legal and communications. Depending on the claim, third parties that certify or verify the work may be present.

Regulatory action and civil lawsuits

With no uniform set of federally mandated environmental, social and governance (ESG) regulatory requirements for public businesses coming from the US SEC – at least not yet – what companies fear right now are greenwashing penalties from that regulator.

The SEC has brought a number of cases allegations of greenwashing (such this one against BNY Mellon last May and against Goldman Sachs Asset Management last November) for branding and marketing products, investments, or strategies as “ESG” without having the policies and procedures governing how the ESG factors will be evaluated or for not following the policies and procedures the firm does have so as to avoid disclosing how the products differ from marketing claims.

The US Federal Trade Commission (FTC) is updating its environmental marketing guidelines, asking for public comment in December on those potential updates and changes to help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act. The Commission said it “seeks to update the guides based on increasing consumer interest in buying environmentally friendly products”.

Class action lawsuits

Businesses also face civil lawsuits, sometimes class-action ones, for their misleading claims. For example, a proposed class action alleges the products in Nike’s “sustainable” clothing collection are not as eco-friendly as advertised given the items are not actually made with environmentally friendly materials.

Nonprofit organizations also exert pressure in this arena, and even against companies known for their efforts to be a better steward of the planet. The Centre of Science in the Public Interest issued a critical report about the popular ice cream brand Ben & Jerry’s and its labeling of ingredients as “natural” and “all natural,” leading the company to get rid of the label.

In 2021, the environmental organization Earth Island challenged Coca-Cola’s use of green slogans and social posts regarding its commitment to a “world without waste,” “doing business the right way,” and “sustainability.” Coca-Cola was also sued in California by the Sierra Club, which argued that labeling bottles “100% recyclable” when most end up in landfills was misleading.

Aspirational ethos

Both suits were dismissed, with the DC court finding Coca-Cola’s statements to be merely “general, aspirational corporate ethos,” and the Northern District of California finding that no reasonable consumer would understand “100% recyclable” as a guarantee that the bottle will be recycled, but rather that it can be recycled.

Last summer, the news outlet Quartz carried out an extensive investigation into H&M’s claims that it was sustainable and accused the fast fashion brand of making false or misleading claims about their sustainability efforts, particularly through the misuse of the Higg Index, which is H&M’s sustainability certification system.

H&M reacted and took measures to be more transparent about its environmental impact, including publishing a list of suppliers and disclosing the environmental impact of each product.

Independent reviews

Consulting firms are offering their services to help businesses fashion public-facing communications that more accurately describe their products – whether ice cream, clothing, or investment vehicles.

Hiring experts can mean adding an independent perspective to the task, gaining knowledge of how other companies are handling the same challenges, and saving limited personnel from engaging in in-depth studies or surveys.

Businesses for themselves, though, must also decide on how comfortable they are in being more transparent. Being more candid can help them gain trust from consumers – folks who might care about sustainability, but also not expect businesses to use absolutely no water, plastic, or chemicals to make quality products.

In the fall of 2020, ASKET, a sustainable menswear company, began including an “impact receipt” with some of its garments. Customers receive a breakdown of the CO2 emissions, as well as the water and energy consumption, to create the specific item they’ve purchased. 

Audit content

Companies should consider undertaking an audit of current and recent past consumer facing content to identify whether retractions or clarifications, or other interventions, are required.

Past statements might not reflect the reality of current production, suppliers, ingredients, strategies, etc. Is there enough recent evidence to support sustainability statements, and who are the persons in the organization best poised to evaluate that evidence?

Some companies are engaging in so-called “green-hushing” – avoiding any claims of environmental or social benefits of their products or investment strategies – so as to circumvent the threat of greenwashing completely. This might be a bit of a dramatic strategy – as supplying no news allows others to create narratives for you and might remove you from consideration by those clients and customers hoping for to see more ESG commitments.

Cautious approach

With that said, a cautious approach to the creation of consumer-facing content is warranted. Claims that can be supported with current evidence are best suited for our 24-hour news and social media analysis cycles.

Also, along with possibly engaging outside experts, remember that certain public-facing statements with any ESG claims should involve a collaboration of internal corporate units weighing in: compliance, legal, marketing, procurement, marketing, etc. Each department has a specific role to play in protecting the business from financial, regulatory/legal and reputational harm.