With COP26 almost upon us, the thoughts of some of the greatest minds of the planet will no doubt be all over our screens in the coming days.

Which makes it slightly strange to be quoting hip hop legends Public Enemy in an ESG column. But few assessments would better sum up the state of the greenwashing issue at the moment than “Don’t believe the hype”.

Like any cynical communicator, I’m mindful that much is done to make reputations as glossy as possible, and despite the universal understanding that behaviour is what does most to shape it, words that make it seem as positive as possible will always be swirling around.

As we approach events in Glasgow though, and with calls growing not just for standardisation in ESG reporting but also regulation to counter greenwashing, the need to address it seems to be coming to the fore.

Doing so will of course require some definition – an untruth is an untruth, but how far can a business go in varnishing (with paint, in this case) its credentials so that the truth is stretched beyond acceptable bounds?

In other words, how much hype is too much, so that it tips over beyond embellishment, either into claims that can’t be substantiated or, worse, misrepresentation?

All of this is likely to be subject to much more scrutiny in coming months, but the recent calling out of greenwashing may place a lens of sorts over some of the commitments and comments made at COP26. While much of the recent media attention has focused on ESG investing and the need to clamp down on claims that overstate ‘green’ progress or credentials, the point that hasn’t been made yet – but will surely come – is that hyping green matters should be treated differently to hyping, say, a product’s other benefits of performance.

That doesn’t mean presenting facts with no emotion or context, but does likely mean information must be fair, accurate and balanced, with greater definition around how those factors are applied.

If not, green hype may become a clear and heightened reputation risk.

Again though, what is greenwashing? Reuters handily published an explainer piece this week outlining its own assessment. But until that is set in regulatory or standards-based stone, despite the Government’s forthcoming roadmap, expect the noise around greenwashing to continue.

For ESG funds, a Financial News piece this week asked whether greenwashing now constitutes a significant reputation risk for those deemed to have pushed it too far.

For large companies, the rise of media content that calls out greenwashing will surely now be more central on the radar. Comedian and protagonist presenter Joe Lycett’s Channel 4 show that pitched him directly against Shell’s storytelling is a case in point.

This piece in FT Adviser posed the question of what being green really means, concluding that despite the hype concerns, ESG investing is here to stay. But, it said: ““Greenwashing is a major problem and likely to impact negatively in the minds of clients who will see through the marketing hype and untruths.

“There are so many misleading statements from investment house marketing departments. For instance, I’ve seen a company offer a ‘carbon-free’ fund, which includes Amazon in its top 10 holdings. But many people would not consider Amazon carbon free, with its carbon-fuelled delivery vans and excessive packaging."

And as Australia both set decarbonisation targets and its prime minister planned to turn up at COP, a PwC report highlighted the loose pledges and unsubstantiated net zero targets of some of its companies, perhaps demonstrating that ‘tolerance’ for greenwashing may vary not only by sector, but by provenance.

Over time, there will likely be reduced risk of companies around ‘washing’ as definitions firm up and clearer lines are drawn. But until then, expect what green really means to come into question frequently, and hype to be a tool used very carefully.

The ESG News Review is written by Steve Earl, a Partner at BOLDT.

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