Many employers are relying on “made up” sustainability credentials to bolster brand awareness and compete for talent, rather than focusing on climate change and implementing effective strategies to tackle it, but HR can help, Sarah Ronan finds
Despite claims that it is business as usual in No. 10 this summer, it’s difficult to argue that there is anything ordinary about Cobra’s first meeting to deal with a heatwave. Soaring temperatures and a ‘risk to life’ warning have added momentum to the national conversation on climate change and what we’re doing to tackle it.
Not enough, according to Emma Howard Boyd, chair of the Environment Agency. In a speech on 4 July, Boyd warned that greenwashing by businesses was giving us a “false confidence that we are already addressing the causes and treating the symptoms of the climate crisis”.
HR and the environment:
HR must step up to the climate challenge
Majority of UK workers motivated by climate change
Do you need to start asking about the environment in job interviews?
HR can prepare future leaders for climate crunch point
Her warnings are not unfounded. Days earlier, retailer H&M faced accusations of greenwashing and threats of economic sanctions for using a sustainability index that the Norwegian Consumer Authority had described as ‘false and untruthful’.
While experts warn that these high temperatures are likely to be the new normal, organisations also find themselves feeling the heat. But could the pressure actually discourage organisations from taking positive action on climate and sustainability? And are employers really doing enough?
“In a digitally connected world, there really isn’t any hiding place,” says Michael Johnson, co-founder of business consultancy Wading Herons.
“The old reputation management and communications strategies of the past get pulled apart by well-informed clients, customers and employees who can see through the hot air. With regulators starting to bring legal proceedings against businesses that have been shown to be greenwashing, this stuff is now way past a voluntary brand-building exercise.”
That message doesn’t appear to have landed in the boardroom quite yet though. In a recent survey of C-suite executives by Clearly, more than half (52%) of respondents said their number one reason for implementing ESG policies was to drive brand awareness and influence customer purchasing.
Just 45% cited their commitment to people and planet as their primary driver, while 28% were motivated by competing for talent.
The research also found a significant increase in the number of organisations implementing ESG policies since the pandemic. That figure rose from 17% in March 2020 to 49% in April 2022, with Clearly suggesting that some organisations may be looking to use sustainability to drive growth and recovery.
Paul Mackenzie-Cummins, managing director of Clearly, says organisations indulging in greenwashing could deter other businesses from communicating their own impact in case they also face similar accusations.
“A report by the Competition and Markets Authority in 2021 found that around 40% of claims made by organisations as to their credentials were not factual. They are made up,” says Mackenzie-Cummins. “No business with genuine intentions should ever fear being accused of greenwashing.
“The simple act of demonstrating the value of each action they take, and the impact it makes, will shuffle any prospective doubters to the side and free up the path to steal a march on the competition.”
The right motivations need to be accompanied by a realistic attitude towards what’s possible if organisations are to avoid such accusations, says Katie Ahmed, ESG manager at Basalt Infrastructure Partners.
“Investors are not necessarily looking for firms to have all the answers yet, but the intention needs to be there,” says Ahmed. “You’re more likely to run into problems if you exaggerate or make out that you’re further advanced than you actually are.
“Objectives should be realistic as you cannot achieve everything at once so need to prioritise and pick your battles.”
Samantha Martin-Williams, chair of the remuneration and people committee at Australian building society Newcastle Permanent, says that ESG goals have to be at the core of an organisation’s legal and moral fabric, rather than something that’s added on just to satisfy stakeholders.
“Everyone just needs to start,” says Martin-Williams. “It can be a little daunting if you’re really early on in your ESG journey, but the starting action is as important as the next step that you take.”
HR has a really important role to play in shaping what that action looks like, according to Martin-Williams. “ESG is really a cultural piece,” she says. “HR is not the only cultural custodian in an organisation, but it can help to shape the cultural impact [of ESG policies]. It also has an important role to play in partnering, monitoring and reporting.”
As organisations attempt to avoid charges of greenwashing, HR is in the unique position of being able to guide that behaviour, agrees Andrew Tweedie, director of HR consultancy Tweedie Henrich.
One way he suggests HR can actively influence an organisation’s commitment to genuine sustainability is by assessing the environmental impact of its rewards and benefits packages for senior executives.
“When you’re looking at the psychological contract for people who are status aware, quite often that status comes with the ability for high consumption,” notes Tweedie. “You need to change the mindset of that executive towards modelling behaviour for other people, but that will take evidence-based management.”
Tweedie is very clear that HR has a role to play in making it safe for employees to speak up when they feel that greenwashing is occurring too.
“HR is not an environmental agency and it won’t necessarily know anything about full lifecycle analyses, but it can recognise that its people might have that knowledge,” he says. “So, it’s a bit like the kind of safeguarding and prevent duties that people might have.
“In a similar way, people should be able to say, ‘I’ve got a duty towards the environment’ and then feel that their employer is happy to explore that with them.”
It’s becoming increasingly difficult for organisations to hide behind green PR, with some even facing legal proceedings. In a ground-breaking court case, German utility giant RWE is being sued by a Peruvian farmer who claims that the company’s greenhouse gas emissions have led to the melting of a glacial lake on his land.
In a time of red-alert weather warnings and global climate strikes, it’s clear that organisations should be prepared to be held accountable and HR, as a leadership function, has a role to play in ensuring that starts from within.