Greenwashing Concerns Drive Caution in Corporate Sustainability Planning

The spectre of greenwashing looms large over corporate sustainability efforts in Asia, prompting companies to tread carefully in their environmental, social, and governance (ESG) initiatives. A recent study reveals that fears of misrepresentation are reshaping sustainability planning and communication strategies, driving a cautious approach among executives.

According to the study, conducted by Kearney, more than eight in 10 companies have become more apprehensive in their sustainability planning and target-setting due to concerns about greenwashing. The apprehension is driven by tightening regulations and heightened scrutiny from investors and consumers regarding ESG claims.

Carolina Rodriguez, a sustainability expert, notes that rapidly evolving regulations have left many companies uncertain about compliance, leading some to opt for silence rather than risk accusations of greenwashing. Multinationals, particularly those with regional offices in Asia, are particularly exposed to scrutiny and have imported fears of greenwashing from Western headquarters.

Despite the challenges, the study suggests that greenwashing concerns are driving positive changes in corporate behavior. The fear of backlash has motivated firms to invest more in resources and capabilities to deliver on sustainability commitments. Furthermore, it has spurred greater attention to supplier arrangements and prompted companies to tighten sustainability policies and processes.

However, the study also highlights areas of concern. While executives express confidence in achieving net-zero emissions targets, less than one-third believe their decarbonization plans align with the Paris Agreement. Additionally, a significant portion of executives remain unaware of their company’s decarbonization targets, signaling potential gaps in internal communication and understanding.

Rodriguez emphasizes the need for companies to foster transparency and honesty in their sustainability narratives, acknowledging shortcomings while demonstrating a commitment to improvement. She suggests that investing in internal communication and awareness-building can help bridge gaps and mitigate the risks of greenwashing.

Despite lingering perceptions of sustainability efforts as a cost rather than a value-creating opportunity, Rodriguez remains optimistic about the potential for meaningful progress. By addressing concerns surrounding greenwashing and enhancing internal alignment, companies can chart a more sustainable path forward, ensuring their actions align with their environmental commitments and contribute to positive change.