Green Hues or Smoke and Mirrors? Nearly Half of Organizations are Concerned They’re at Risk of Unintentional Greenwashing

New research from Ivalua has found that nearly half (45%) of U.S. organizations are concerned that they could be at risk of unintentional greenwashing. With pressures from customers and regulators on the rise, the spotlight is on organizations to ensure all green claims are legitimate.

The study reveals that less than half (48%) of organizations claim they are “very confident” that they can “accurately” report on Scope 3 emissions. Meanwhile, nearly two-thirds (62%) say reporting on Scope 3 emissions feels like a “best-guess” measurement.

While the Securities and Exchange Commission evaluates including Scope 3 emissions in its final Climate Disclosure Rule, it’s critical that US organizations proactively manage Scope 3 reporting. Over time, organizations must substantiate green claims with verifiable data rather than relying on best guesses.

The research also shows nearly two-thirds of organizations agree that the cost of not taking action will far outweigh the cost of implementing green initiatives. But while 88% of organizations are confident they’re on track to meet net-zero targets, many don’t have comprehensive, fully implemented plans in place for:

• Adopting renewable energy (78%).
• Reducing carbon emissions (68%).
• Adopting circular economy principles (72%).
• Reducing air pollution (67%).
• Reducing water pollution (63%).

“Organizations are aware they must urgently address sustainability and understand the cost consequences of not doing so. But this lack of confidence paints a negative picture,” comments Jarrod McAdoo, director of sustainable procurement at Ivalua. “A lack of perceived progress could fuel accusations and fears of greenwashing, so it’s important to remember that obtaining Scope 3 data is part of the natural maturation process. Many sustainability programs are in their infancy, and organizations need to start somewhere. Estimated data can help determine climate impact and contribute to building realistic, actionable net-zero plans. Over time, organizations will need to make significant progress on obtaining primary Scope 3 data and putting plans in place, or risk financial penalties as well as ruining reputations in the long run.”

“The findings demonstrate that to build trust and credibility in sustainability programs, organizations need to find ways to best measure and gauge the impact of their Scope 3 emissions,” Oliver Hurrey, founder & chair, Scope 3 Peer Group. “But absolute accuracy could be hard to achieve without significant investment. Organizations shouldn’t spend time and money fixating on 100% accuracy. Instead, they need to equip procurement teams and the wider business with good data and insights. This will empower procurement teams to start taking action to identify unsustainable suppliers and ensure the business is headed in a greener direction.”

Working with suppliers will be critical in achieving net zero. The research found that over half (51%) of organizations agree that green initiatives to reach net-zero goals that don’t involve suppliers are a waste of time. Ineffective supplier collaboration (26%) was also among the top challenges organizations must overcome, with other challenges including:

• Supplier resistance to reduce emissions (27%).
• Other objectives being prioritized, such as cost and risk (24%).
• Incomplete, absent or unreliable data on sustainability (22%).
• Supplier inability to assess emissions (18%).
• Poor visibility into sub-tier suppliers (18%).

“Nearly two-thirds of U.S. organizations agree that an inability to measure supplier emissions accurately makes it hard to turn words into action,” McAdoo continued. “There is a clear need to adopt a smarter approach to procurement. Organizations need granular visibility into their supply chains to ensure they can measure the environmental impact of suppliers but also collaborate with suppliers to develop improvement plans. Only with this transparency can organizations showcase meaningful sustainability progress and avoid accusations of greenwashing.”