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Afraid to Say the “S” Word? Clarity Is Coming to Sustainability Communications

After years of companies increasingly prioritizing and promoting sustainability efforts, the tide seems to be turning. Some media, consumers, investors, and other stakeholders are quick to try to poke holes in companies’ sustainability strategies.

“Promoting ESG policies was once an easy layup to score good press — and theoretically move toward bettering society — but now it’s a way to court controversy, the ire of politicians, and attention from well-funded anti-ESG groups.

Now, however, many businesses are afraid to say anything about their sustainability work.

During earnings calls from April 1 to June 5, 2023, executives at U.S.-listed companies used terms related to sustainability and diversity 31% less than they did the year prior, according to AlphaSense, as reported by the Wall Street Journal.

On its own, this decrease in sustainability communications threatens global progress on fighting climate change, as businesses can use their influence to share progress and goals to encourage others to follow suit.

Worse, if sustainability and ESG backlash cause companies to be fearful of actually implementing initiatives in these areas—and therefore not reduce emissions—society could suffer.

But that doesn’t mean companies are destined to let sustainability efforts fall by the wayside. The good news is that clarity is coming.

In addition to a few existing regulations around the world, like the UK’s Green Claims Code, more rules will likely come into effect in the U.S. and abroad that will give companies confidence and a roadmap for sharing their sustainability stories.

Specifically, businesses can look forward to the following:

U.S. FTC Green Guides Update

The Federal Trade Commission (FTC) publishes Green Guides designed “to help marketers avoid making environmental claims that mislead consumers,” the agency explains.

The first guides came out in 1992, with the last update occurring in 2012. Now, the FTC is considering additional updates that should further clarify how to make clear, legitimate sustainability claims.

Some of the areas the FTC is reviewing is whether certain terms like recyclable and compostable need better definitions/guidelines for product marketing.

The Environmental Protection Agency (EPA), for example, submitted comments to the FTC calling for a higher bar for these areas, such as qualifying when a product can only be composted in a municipal/commercial/industrial facility so that consumers don’t inaccurately think something’s eligible for home composting.

The FTC is also reviewing areas like carbon offsets and climate change-related terminology like net zero and carbon neutral.

Ceres, a sustainability advocacy nonprofit, submitted comments recommending the FTC require “carbon credits to be certified by a GHG crediting program, which ensures that carbon credits are additional, permanent, conservatively measured, verified, exclusively claimed, and that leakage is addressed.”

Ceres also recommended that the FTC align with the Integrity Council for the Voluntary Carbon Market’s (ICVCM’s) Core Carbon Principles for best practices related to carbon credit usage.

Relatedly, Ceres recommended the FTC require companies to follow best practices for climate change-related terminology, such as using the Science Based Target institute’s (SBTi’s) Net-Zero Standard.

Altogether, updates to the Green Guides should bring more clarity to sustainability-related claims, while weeding out greenwashing. Businesses that follow the guides can gain confidence that consumers will understand and trust their claims.

Sustainability New Growth with Fresh Plantingsource

New EU Green Claims Directive

In the European Union (EU), the European Commission (EC) adopted a proposal in March 2023 for a new Directive on green claims and environmental labels, though it could take a few years to be passed and implemented.

Similar to the FTC’s Green Guides, the Directive addresses claims in areas like recyclability and carbon credit usage. For example, with carbon credits, the proposed Directive will increase transparency, such as by requiring disclosure of the proportion of total emissions offset and whether the offsets come from reducing or removing emissions.

Plus, the Directive will require green claims “to be independently verified and proven with scientific evidence,” the EC explains.

This is important considering that the EC found over half of environmental claims in the EU in a 2020 study were “vague, misleading, or unfounded.”

So, by putting new standards around environmental labels and claims, the EC says that “will allow consumers to make better informed purchasing decisions. It will also boost the competitiveness of businesses who are striving to increase the environmental sustainability of their products and activities.”

It’s Not Too Late To Make Climate Change Your Business. Learn More

VCMI Claims Code of Practice

The Voluntary Carbon Markets Integrity Initiative (VCMI) launched a provisional Claims Code of Practice in 2022, with additions expected later this year.

The idea is that by bringing together businesses, NGOs, indigenous and local communities, and other stakeholders for input, the VCMI can establish clear guidelines for carbon credit usage and claims that build trust and credibility.

The Claims Code of Practice includes a four-step framework that businesses can use “to make credible claims about their voluntary use of carbon credits,” VCMI explains

To start, businesses need to make science-aligned net-zero commitments and interim targets. From there, VCMI has three levels of claims: VCMI Gold, VCMI Silver, and VCMI Bronze.

To claim a company has reached VCMI Gold, for instance, a business has to be on track to hit its next science-aligned interim target for Scopes 1, 2, and 3 emissions through reductions within its value chains and then cover 100% of remaining emissions through high-quality carbon credits.

That differs from just claiming to be carbon neutral, for example, by purchasing carbon credits without regard to also being on a legitimate reduction path.

As the VCMI code gets solidified, that could help businesses voluntarily share their efforts to offset emissions while on the path toward decarbonization, without facing as much risk of stakeholders claiming that businesses are hiding behind ineffective carbon credits.

Sustainability With Renewal Energy ProductionSource

Communicate With Confidence

In all, these frameworks—some required, some voluntary—exemplify how clarity is coming to sustainability communications. While there may still be some naysayers, businesses that follow third-party standards and focus on verifiable, clear claims stand a better chance of gaining stakeholder trust.

Even if consumers do doubt certain claims, being able to back up your words, such as by following trusted standards like those set by the SBTi, can make it easier to win over doubters. Moreover, these standards can advance climate efforts by giving businesses more confidence to go forward with sustainability strategies and share their work with others.

Meanwhile, businesses can get proactive about decarbonization and purchase high-quality carbon reductions, whether that’s to align with pending frameworks or to exceed existing standards.

Terrapass can help you select from a wide range of carbon reduction credits for businesses, including those related to offsetting business travel, as well as custom solutions.

See for yourself how we can help you confidently reach your carbon footprint goals.

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The post Afraid to Say the “S” Word? Clarity Is Coming to Sustainability Communications appeared first on Terrapass.

By: Daniel Ho
Title: Afraid to Say the “S” Word? Clarity Is Coming to Sustainability Communications
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Published Date: Tue, 27 Jun 2023 02:34:03 +0000

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