Companies are tripping over each other to prove their climate ambition to an increasingly more conscious consumer-base – but also to a growing cohort of investors who want to know whether their investees can thrive in a warming world.
Countries are defining their national climate action targets and enshrining them in law and regulation. Businesses operating in multiple countries need to understand and quantify the very real impacts of this evolution, and the long-term effects of the Paris Agreement.
All of this means that companies must become more savvy about communicating their corporate climate action and making climate-related claims that resonate with and convince stakeholders as well as, most importantly, showing their progress as transparently as possible.
Words are free – it's how you use them that may cost you
Our team believes that there are four key principles for companies to follow when pursuing best-in-class communications around climate claims to avoid accusations of greenwashing.
Avoid vagueness at all costs – i.e. don't commit to a claim without also communicating a clear definition of it. Credible climate action claims require transparency about your activities and require you to show how those activities are part of a holistic, long-term climate strategy. Transparency about what goes behind a claim puts concrete plans under public scrutiny, and pushes your corporate sustainability teams to pursue the best possible solutions for reducing and balancing your organisation's overall emissions.
Transparent communication, disclosure, and honest updates on your progress (both the good and the not-so-good) are essential to upholding the integrity and accountability of any corporate climate action and related claims.
Show, don't tell. What real actions are you taking to substantiate your claim? Your audience needs to be convinced that you really are walking the walk. Sound operational evidence and verified impact data is an important way to provide that assurance. Dial up the stats that reflect your organisation's sustainability priorities and that best resonate with your target audience.
Always align your communication strategy with your long-term sustainability strategy and your company's wider growth strategy. To hedge against changing terminology around corporate climate action claims, South Pole also encourages businesses to explore claims that are authentic to your brand, and that reflect your full suite of ambitious climate activities to reduce your carbon footprint.
Don't forget - Vulnerability
Being open about your dilemmas and showing vulnerability is a new must-have in the climate communications toolkit. Addressing climate change takes time and collective effort, and displaying your challenges or setbacks not only builds trust, through elevated transparency and authenticity, but can also lead to finding solutions to your dilemmas as a result of crowdsourcing ideas.
Governments and market authorities are watching
Governments are increasingly receptive to civil society's demands for greater clarity around how organisations communicate climate action – particularly if such communication has the potential to mislead consumers and investors about the actions that organisations are taking (or not taking) to address their carbon footprint. It comes as no surprise that this trend has resulted in an increasing number of litigation cases. According to the UN's 'Global Climate Litigation Report' in 2020, the number of such cases doubled in the five years prior. While fossil fuel companies remain a primary target for litigation cases in 2022, climate litigants are now expanding their spectrum more broadly: corporations from the food and agriculture, plastics and packaging, transportation and financial sectors are among the top five most-targeted players.
Country-specific regulation is also emerging. The Australian Government, for instance, has put out clear guidelines on companies' environmental claims, as have the consumer watchdogs in the Netherlands and the UK. The EU has also just published its draft bill on green claims, and the French government has even passed legislation with strict requirements on when companies can, for example, claim 'carbon neutrality'.
More countries are likely to follow suit, mandating that companies transparently report how their climate action claims reflect emission reductions within and beyond their operations and value chains. South Pole welcomes any initiative that fosters transparency in how companies take and talk about climate action. Consumers need clear language and transparent communication on the brands they support – without exaggerated or misleading claims – to best inform their choices. Companies who wish to share their progress also need clear guidance on climate claims in order to avoid greenwashing.
Leaders are going green, then going dark – “green-hushing" is on the rise
Among sustainability-minded organisations, the trajectory for net zero is encouraging: within our 2022 research analysing climate commitments of 1,200 corporate leaders across 12 countries, setting a net zero goal, science-based reductions milestones (SBTs), and a clear target date have become standard practice across all industries.
Nearly two-thirds of organisations are committing to rapid action by 2030 at the latest, and 13% of surveyed organisations have aggressive plans to meet net zero targets by or before 2024.
In addition to our reassuring findings on companies who are ramping up their climate action, an alarming trend emerged from our research: despite businesses increasingly backing up their targets with science-based emission reductions milestones, nearly a quarter (23%) decided not to publicise their milestones beyond what is mandated. This is a concerning trend, as less public-facing communication makes targets harder to scrutinise and could lead to missed opportunities for sectors to work together to decarbonise.
“Evidence shows that sustainability-minded businesses are increasingly backing up their targets with science-based emission reductions milestones, which is absolutely the right approach. But if a quarter today aren't coming forwards with details on what makes their target credible, could corporate green-hushing be spreading? The speed at which we are overshooting our planetary boundaries is mindblowing. More than ever we need the companies making progress on sustainability to inspire their peers to make a start. This is impossible if progress is happening in silence," says Renat Heuberger, CEO of South Pole.
You must build a foundation for claims through measurable, time-bound climate action
Companies need to build a robust foundation to make bold claims through ambitious, measurable, and time-bound climate action. Claims must be built on a holistic climate strategy that clearly shows what your company is doing to meaningfully reduce its carbon footprint while helping to scale carbon finance, which is critical to supporting global climate change mitigation and adaptation efforts in parallel. It is important to note that your organisation's efforts to decarbonise its own emissions will draw the most scrutiny from investors, consumers, and civil society – and even employees. At the same time, beyond value chain mitigation is essential. According to the Science Based Targets initiative (SBTi), “companies must scale up investment and go beyond their science-based targets by channelling additional climate finance towards mitigation activities outside of their value chains now to contribute towards reaching societal net-zero."
Fotrunately, we now have clearer definitions for what 'outstanding' looks like, especially for the private sector.
For the ambitious target of corporate net zero emissions, for example, the SBTi has published a clear standard against which it can (and will) evaluate businesses' net zero commitments and plans.
This is why embarking on a carefully planned, science-based climate journey today is so important. A credible climate journey involves several stages: it starts with understanding your company's impact on the planet – so, measuring the material emissions associated with your company and strategising how to minimise them – and ends with reducing, compensating and neutralising your footprint as you work towards net zero.