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Have you stayed in a hotel recently where you were asked if you'd mind reusing your towels "to save water and the environment"?

It seems a completely reasonable request, and no doubt you agreed. But was there any clear and comprehensive information inside your hotel room or on the hotel’s website about what else the establishment does to reduce energy and water consumption? If not, you could very well have fallen for a classic example of greenwashing.

What Is Greenwashing?

The word "greenwashing" was coined in 1986 to describe exactly the situation I've just outlined. It covers a much wider range of claims, though, that suggest that a product, services, process, brand or business has a positive or neutral environmental impact. Alternatively, the claim may suggest that it's less damaging to the environment than a previous version of the same goods or service, or than an offering by a competing business.

Greenwashing is a form of marketing or PR that makes such environmental claims without substantiating them correctly. This can apply to sustainability claims that include climate change, biodiversity, animal welfare, workers’ rights and social responsibility. The claims may sometimes have limited validity but give the impression that the company is "green", instead of slightly less damaging than the alternatives.

Small Businesses and Sustainability

Smaller businesses are often more sustainable by nature, simply because they tend to operate locally and therefore don't have complex global supply chains. Many business owners are sustainably minded individuals who transfer their personal beliefs to their business. For instance, they might go digital to save paper and trees, encourage staff to switch off the lights when leaving the office, reduce the use of plastic, recycle more, reduce food waste etc.

The Federation of Small Businesses (FSB) has found that the majority of small business owners are aware of the need to move to a more sustainable model, and many have taken some steps towards this, especially addressing energy use, but only a minority actually have concrete plans for achieving Net Zero status. Even more worryingly, 69% of small businesses don't actually know how to measure their carbon output.

Where Sustainability Claims Can Go Wrong

Small business owners may proudly include statements such as “environmentally friendly business” or “committed to protecting natural resources” in their company literature and have an Environment or Sustainability Policy. What’s not to like? However, there are some common mistakes that businesses make when presenting their “green” credentials, even when the claims are sincere.

Broader, more general or absolute claims are much more likely to be inaccurate and misleading. Terms like “green”, “sustainable”, “eco-friendly” or “carbon neutral”, if used without explanation, suggest that the entire product, service or business has a positive impact, or at least no adverse impact. Unless a business can prove that, it risks falling into the greenwashing trap.

Similarly, businesses often focus their green credentials on a minor part of what they do, but don't address the core business activity or products that might be producing significant negative effects. This is treading on the borderline of greenwashing.

Finally, not providing easily accessible evidence for claims, preferably through independent studies or third-party certification, makes a business's green claims weak and shallow at the very least. It can also attract consumer complaints and negative publicity. or even draw the attention of the regulator.

What the Government Is Doing

When the government launches an enquiry into the market practices or tightens the regulation, it sends a signal to the business community that current practices are not aligned with its policies. In August 2021, the government began a review designed to explore the extent of greenwashing in the retail energy sector. The review was aimed at deciding whether the rules around what can be called the green tariff remain fit for purpose.

The following month, the Competitions and Markets Authority published the “Green Claims Code”. Businesses were warned that they have until the New Year to make sure their environmental claims comply with the law. Most recently, in October, the Environment Agency launched a project to standardise metrics for environmental performance in the food and drink sector.

How Can Small Businesses Be Sustainable and Avoid Greenwashing?

The regulatory and compliance burden on substantiating green claims is only going to grow. This will be especially true for consumer businesses such as manufacturers, wholesalers, distributors, retailers and service providers, driven by the demand for sustainable products, services, brands and businesses. So what are the ground rules for businesses to stay clean while communicating green credentials?

1. Clearly state what terms like “sustainability”, “ecology”, “biodiversity”, “carbon neutrality” etc. actually mean in the context of your sector, your business and your products or services. Explain which aspects or elements of your business have a positive impact on your customers’ life or business, the environment and the society it affects. Also, make it clear in which ways you go above and beyond what’s required by law or what is standard in your industry.

2. Tell the whole story. Whether it's about carbon emissions, use of energy or water, or managing waste, show that you understand all impacts, positive and negative, of your entire business operations. Also highlight your full product or service life cycle, from raw materials to disposal and recycling.

3. Publish your action plan and report progress. A great first step is to commit to reducing, and eventually eradicating, any negative impacts of your products and activities, as well as multiplying positive effects. S-m-a-r-t action plans and up-to-date progress reports, available for all stakeholders to inspect, will demonstrate that your business is sincere and accountable.

4. Whenever possible, aim to achieve recognised eco labels and third-party certification. Certification provides equivalence and assurance for customers and consumers. It also demonstrates your commitment to communicate your green credentials in a way that makes them easily understood, accessible and comparable.

Where Can You Find Help?

However dedicated you might be to running a sustainable business and working towards Net Zero, it's not easy for a small business owner to know where to start — let alone ensuring your claims don't come over as greenwashing. The good news is that there's help available.

The FSB offers advice on what credentials you should be working towards that will provide objective validation of your green claims. If you need more hands-on assistance, however, Small and Sustainable offers help in working positively towards achieving Net Zero Standard. Contact us now to start your sustainable journey — with no greenwashing.

If there's one thing that's become clear in the past few years, it's that reducing carbon emissions is a collective effort, regardless of industry, country or continent. As Andrew Griffith, UK Net Zero Business COP Champion, put it:

“The message to businesses is clear — engaging on net zero is no longer an option but a necessity from today, with businesses large and small now needing firm climate plans and commitments in place to supply major government contracts.”

A New Focus in Carbon Reduction

In 2019, the government formally committed the UK to achieve Net Zero carbon emissions by 2050. This is to be done through a combination of renewable power generation, energy efficiency measures including equipment and buildings, electrification of transport, green finance and various offsetting processes, such as planting trees and direct carbon capture.

As part of this strategy, from November 2021 all government organisations are required to ensure any company bidding for a contract has an effective carbon reduction policy in place. And this is likely to affect you — even if you're an SME or micro-business.

What Does the Government's New Regulations Cover?

The new regulations cover all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies, which are referred to as "In-Scope Organisations". Essentially, this is going to include any public body you might be working with.

These organisations are required to ensure that their suppliers are planning for Net Zero status by 2050. They'll therefore have to ask any company tendering for a contract worth more than £5 million to provide a carbon reduction plan — and failure to do so will result in losing your chance at the contract.

What Information Will You Need to Supply?

If you're tendering for a government contract, you'll be asked to submit a form on which you outline both the measures you're currently taking to reduce your carbon emissions and your future plans towards achieving Net Zero status. Even if you have no major industrial operations, measures could include changing lighting to LED/PIR controls or electrifying your fleet of vehicles.

Larger companies have already been required to report their direct and indirect carbon impact. Under these new regulations, however, so-called Scope 3 emissions are included, from sources such as:

· Purchasing of goods and services

· Commuting by employees

· Transporting and distributing goods

· Disposal and treatment of waste

· The impact of your products' end-of-life

Will the Regulations Affect Smaller Businesses?

If you're at the smaller end of the SME spectrum, you might assume that these new regulations will never apply to you. After all, even if you did win a public contract, it's unlikely to be worth £5 million.

It's not as simple as that, though. As a smaller or micro business, you probably supply many companies, and if they tender for government contracts they'll have to account for all their carbon emissions — including those produced by their own suppliers.

This means that, even if you don't go near public contracts, you might still find yourself asked to provide a carbon reduction plan. And, if you don't already have one in place, it's unlikely that you'll be able to improvise effectively.

The time to show your commitment to Net Zero carbon is now. Get in touch with us to learn how to take the steps you need.

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