We’ve all heard of “greenwashing,” but what is it really? Turns out, that simple question isn’t so simple.
Oxford defines greenwashing as “the creation or propagation of an unfounded or misleading environmentalist image.” Some call it false advertising, others call it fraud – however you slice it, greenwashing is a problem because it provides the illusion of action, while protecting the status quo.
But what does it take to earn a credible and founded environmentalist image in our current context? How much is enough? Is greenwashing about what you do or don’t do, what you say or don’t say?
The fact is, what constitutes greenwashing is a question rife with debate and uncertainty. That’s because definitions, standards, and rules around what is “green” and what isn’t are still in flux.
For companies, and the communications and marketing teams that support them, this lack of clarity has led to fear and paralysis. The technical term is “greenhushing”— clamping down on communications about climate efforts for fear of being caught in a greenwashing scandal. It’s an understandable response.
Last fall, a UK regulator forced HSBC to pull a major ad campaign because, in the regulator’s view, it misled consumers on the company’s green credentials. The campaign focused on positive actions HSBC was taking to address climate change: planting millions of trees and investing a trillion dollars to help their clients transition to net zero. The problem? These ads didn’t mention that HSBC is also a major investor of oil and gas. The UK’s Advertising Standards Authority basically called it a lie by omission.
While cases like this are forcing companies to think twice about how they publicly communicate and promote their climate-related activities, “hushing” is not a viable strategy. Addressing climate change has not only become a table stakes issue for most sectors, but there is also increasing pressure for mandatory “disclosure”—regulations that force companies to report on the progress of their climate strategies, including their emissions. (Fun fact: this is happening for real in 0ial sector…but that’s a different blog post).
Greenwashing, at its core, is a communications problem. We can’t solve it through silence. What we need is a communications solution. The good news is, Canada is in the process of developing one.
What is a green taxonomy and how can it help fight greenwashing?
Simply speaking, a taxonomy is a set of definitions. In the financial world, “green taxonomies” have been used to define and distinguish activities or assets that contribute to environmental goals versus those that do not. Jonathan Arnold, an expert at the Canadian Climate Institute, uses the metaphor of a “sorting hat” (à la Harry Potter).
The most important goal of a climate-focused taxonomy is to create clarity for investors and for companies about what we can legitimately call “green.” A taxonomy alone won’t solve greenwashing, but you can see how having clear and agreed upon labels will make a real difference. Barb Zvan, who leads the technical taxonomy taskforce in Canada, equates it to an Energy Star label. If you’re out to buy a new dishwasher, and you want the highest efficiency model on the market, that starry blue symbol guarantees that’s what you’re getting.
Canada is far from the first country to develop a climate taxonomy. The EU basically set the global standard for defining “green.” But Canada is seeking to add something new to the mix: a “transition” label, which would have a different set of criteria from a “green label.” The difference? “Green” projects and activities will emit low or no greenhouse gas (GHG) emissions and contribute to the goods and services the world needs to achieve the global 1.5 degree climate target (think: renewable energy, EV batteries).
“Transition” projects, on the other hand, are about significantly lowering GHG emissions from high-polluting industries, like cement, steel, and oil and gas. But to qualify as “transitional” projects would need to meet strict criteria. Not only would they have to bring emissions down significantly, they would also need to be time limited and avoid what’s called “carbon lock-in” –which basically means making it harder or more expensive for that industry to kick the carbon habit for good.
Differentiating “green” from “transitional” from, well, everything else would go a long way to creating clarity in what is currently a sea of mud. And the upshot is this clarity can really help channel big dollars from around the world into the projects our country needs most to address climate change. Projects that perhaps, your company, is helping advance?
If you want to dig deeper into Canada’s taxonomy journey, we’ll drop a bunch of links to accessible sources at the end of this blog. But let’s connect back to why it matters for communicators and marketers.
A Climate Taxonomy Would Make Our Job A Lot Easier
Would a defined “transition label” have helped HSBC avoid the reputational and financial damage of having to pull its climate ad campaign? Probably not.
However, it would have enabled the company to credibly clarify if, and to what extent, its investments in the energy sector were truly and meaningfully driving down emissions and putting industry on a credible path to net zero. A transition taxonomy would give companies, and the communicators who work for them, a language for talking honestly and transparently about the “dirty work” of shifting whole sectors and business models away from dependence on high-polluting activities and products.
As communicators and marketers, those definitions and bright lines would help us avoid the traps of greenwashing while giving us the tools to speak confidently about the work our companies are doing. Now that’s gold right there.
To find out more about Canada’s Climate Investment Taxonomy, check out these great resources created by our clients, the Institute for Sustainable Finance and Canadian Climate Institute. To chat climate communications, reach out to me any time: Jsitnick@argylepr.com