With increased focus on environmental, social and governance issue (ESG); consumer protection, consumer awareness and product safety, today, many businesses have adopted various strategies that take into account ESG principles and consumer protection compliance. Globally, the growing demand for sustainable consumption, eco-friendly products and services, and sustainable investments are key topical issues which have posed various challenged to many businesses today. One of such strategies is communication of an entity’s compliance with ESG principles to its existing or prospective customers and partners, financiers, and investors and/or regulators, civil society, consumer protection organisations, and the public through marketing, advertising and/or ESG disclosures (mandatory or self-disclosures). Many businesses aim to position themselves as entities using environmentally safe technologies and operations and aim to assume a corporate identity of sustainability, good governance and compliant with best practices. Using words, images, symbols and other modes communication, businesses communicate their stand and aspirations on ESG to inter alia retain existing and/ or attract new customers and partners; build a positive corporate image; comply with regulatory requirements; attract investors. However, where such communication is inaccurate, false or misleading, it amounts to greenwashing which is unethical and may also be a violation of consumer protection and competition laws of Kenya.
Greenwashing is a practice where an entity claims to be operating in a sustainable manner whereas not or where an entity claims that it is more sustainable than it is. It is a tactic to make an entity or product appear environmentally friendly without meaningfully reducing the harmful impact of its operations or activities on the environment. Greenwashing entails exaggeration, misreporting, outright or inadvertent misrepresentation or falsification of an entity’s sustainability efforts. It may also include downplaying an entity’s harmful practices on the environment, communities or social issues and governance matters. Closely related to greenwashing is the concept of green wishing where entities indicate where they plan to be in future e.g zero carbon footprints and not stating where they currently stand. Greenwashing may be selective where an entity advertises or discloses only information relating to positive steps or initiatives of the entity’s sustainability efforts while ignoring the harmful practices an entity is engaged in or responsible for across its supply chain.
Examples of greenwashing include false or misleading claims on recycling, reusability, low carbon emissions, carbon neutral claims, plastic packaging; false reporting; involvement in measures which undermine environmental or sustainability efforts; lobbying against existing or proposed environmental laws or policies; unverifiable sustainable claims; false representations of products; claims that an entity is committed to climate change action whereas engaging in harmful and environmentally damaging practices. Greenwashing is a broad concept and it may be done in various ways including inadvertently.
Product Labeling and Packaging
It is common practice for businesses or manufacturers to label products with wording to the effect that their products are produced in an environmentally friendly or safe manner. The product labels may contain various terminologies and wording for example “all-natural”, “recycled”, “re-usable”, “organic”,” pure”, “eco-friendly”, “sustainable’’, “green’’ or “bio-degradable”. There may also be statements the business uses environmentally friendly technology with low carbon emission claims, reduction or elimination of plastics or claims that recycling is a solution to an environmentally unsafe practice whereas not. Moreover, the terminology used may be ambiguous and, in some cases, there may be no sufficient evidence to support the sustainability claims.
Marketing Websites, Brochures and other Communication Channels
Sustainability claims or statements may also be issued on websites, brochures and other communication channels.
Green washing may also occur with respect to statements or claims that waste is managed in an environmentally sustainable manner whereas not.
Mandatory Disclosures or Self Disclosures
In some jurisdictions, ESG reporting or corporate governance reporting is mandatory or common practice. In Kenya, mandatory ESG reporting and corporate governance reporting requirements apply to listed entities. In the case of non-listed companies, ESG reporting is not common practice, but corporate governance reporting is. However, the scope and depth of reporting particularly for non-listed entities is not as extensive as it should be. If the contents of ESG disclosures contain false or misleading statements on an entity’s sustainability position, it might amount to greenwashing.
Recommended best practice is to ensure that a sustainability claim (i) is accurate, based on a generally accepted methodology, is robust and can be substantiated; (ii) is relevant to the products functions, materials used or its performance; (iii) provides information that is useful to a consumer to inform their purchasing decision; (iv) is stated in a transparent manner and allows a consumer to evaluate the claim; (v)makes information related to the claim accessible to a consumer by placing it in a conspicuous place on the product and provision of sources where additional information may be obtained; (vi) considers all three criteria of environment, social and governance and how the claim relates to all ESG criteria .
The Kenyan legal and regulatory framework is not broad enough to cover all forms of greenwashing. However, businesses may be held accountable by customers, business partners, investors, communities, regulators and other stakeholders for greenwashing. Moreover, Kenya’s consumer protection laws prohibit misleading and false advertising. It is prudent for businesses to ensure that all communications across various channels do not make false or misleading claims about their products, or the technologies employed by the entity to produce, preserve or transport them. It is imperative for business entities to review their processes and establish how sustainable the entity is across the supply chain. Businesses must be cautious about inadvertent or flawed reporting or disclosures which may amount to greenwashing.
Leading global entities and blue-chip companies have been accused of greenwashing and suffered reputational damage and financial loss as a result. Even as the Kenyan regulatory ESG regulatory framework is in nascent stages, businesses should focus on understanding ESG issues and reporting standards; regular monitoring of their compliance with ESG standards; seek advisory and training services to build internal capacity on ESG issues; and put in place stringent communication, marketing, advertising and disclosure standards to minimise regulatory and reputational risk associated with greenwashing.
- Constitution of Kenya,2010
- The Competition Act, No. 12 of 2010
- The Consumer Protection Act, 2012
- The Consumer Protection Guidelines issued pursuant to the Competition Act, No 12 of 2010
- Guidelines for Providing Product Sustainability Information - United Nations Environment Programme : Global guidance on making effective environmental, social and economic claims, to empower and enable consumer choice
- Greenwash: what it is and how not to fall for it | Greenpeace UK
- The status of climate change litigation: a global review
- Greenwashing: Article by Neil Hodge https://www.iiakenya.co.ke/images/downloads/Greenwashing.pdf
- Tackling Misleading Environmental Claims: Article by Competition Authority of Kenya