LCA4Climate

Being a sustainable business does not just mean to have a “green” label

  • Laia Hoyos, 22/07/2021
  • 2 mins reading time
  • English
Sustainable Greenwashing
Photo: Contragolpe

Stakeholders are increasingly putting more pressure on corporations to become more transparent in revealing the Environmental, Social and Governance (ESG) impact that their activities have on all stakeholders and the planet.

While Corporate Social Responsibility (CSR) is one response to the ESG pressures, companies and corporations have found the need to improve their competitive positioning by linking sustainability to their corporate business strategy.

On this premise, many companies are trying to get market share by using labels as “eco-friendly” or “100% recyclable” product labels to fit in the more concerned about the planet society. The problem here is that many companies play with greenwashed marketing.

The greenwashing concept happens when a company or brand focuses on one positive thing that their product does for the environment, uses misleading phrases for the consumer to make them think it is really “green”, while distracting attention away from the not-so-green activities they are doing. Furthermore, this harms the credibility of those companies who embrace sustainability values in their core businesses.

Sustainability is no longer about the individual company’s management, but it is about the entire ecosystem and its stakeholders that form it and will only be possible if this concern is implemented through strengthening local communities. The business contribution needs to move towards a sustainable future, and the role of networks is key to advance in sustainability.

The European Commission has made a step to move on this direction by proposing measures to settle transparent and harmonized ESG statements, such as the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), the Sustainable Finance Disclosure Regulation (SFRD), the initiative on Sustainable Corporate Governance and Due Diligence, and the Country-By-Country Reporting (CBCR) directive, among others.

Still, the reality we face is that 2030 is getting closer and we are slowly running out of time on reaching the 17 Sustainable Development Goals (SDG). Each of the 17 SDGs is an urgent call for action to all businesses, sectors, countries, people, and all stakeholders, but it seems that companies might be lying ahead some challenges, as we are still not moving in the same direction since we committed to achieving some specific targets in 2015.

According to the premises of the European Green Deal (EGD) and the UN 2030 Agenda, we should by now start shifting towards a resilient, carbon-neutral and digital economy. But what is the key or starting point? According to the words of Maria Alexiou -Group ESG Senior Advisor at Titan Cement– in an interview conducted by CSR Europe, she stated that “it all starts with the harmonization of international norms and standards to ensure a fair playing field for all. We should focus on democracy and the rule of law as a condition for the implementation of any change towards sustainable and inclusive growth” says Alexiou.

Then, how can companies that have laid the foundation for the integration of sustainability within their business model scale up sustainable solutions to make their systemic transformation even more sustainable?

First, companies must understand the broader context using thinking systems and discovering their stakeholders. Secondly, they must develop resilient business model concepts that demonstrate real and doable environmental and societal benefits. Afterwards, it is needed to test and refine their core concepts to connect more explicitly the creation of environmental and societal benefits, to the creation of business value and competitive advantage. To finish, they should take into account that the first steps of implementation are pilots, so they need to scale quickly to broaden the business model’s impact and value. New industry norms should be established and perhaps reestablish stakeholder dynamics and set new or different boundaries for competition.

Companies must make the commitment to it and focus on the short and long term, be proactive and serve the purpose instead of the cause and focus on real measures. Not only this, but collaboration and networking is built with trust and shared values, and this will further benefit both shareholders and stakeholders. Companies need to make the effort to invest in embedding sustainability into their core business model and value chain and to do so, they need to scale up to multiple best practices.

We face global challenges whose impact differs across countries and regions, and for that reason, we need companies to adapt and align their purpose and strategy for an impactful transformation. Nevertheless, this would never be possible if not all stakeholders are considered in the shareholder’s decisions.

The SDG 17 might currently be the most challenging of all: we have still not achieved the level of consciousness and solidarity required to ensure sustainable and inclusive growth, as defined by the EU strategy for 2030 and the UN Agenda.

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