What does ‘green’ mean? It may have been an environmental buzzword for a long time, but that might be changing. Arguably, ‘green’ has been replaced in many cases by the word ‘sustainable’. The legacy of ‘green’ has left us with the term ‘greenwashing’ which is used to describe the activities of businesses that are perceived to promote a false image of environmental responsibility. Obviously, there are some cases where such an accusation is warranted, but there is also evidence that many companies are neglecting to promote their environmental activities out of fear of accusations of greenwashing. Could the over scrutiny of companies who are simply making an effort to change for the better be driving sustainable ‘best practice’ underground? Or are there more factors driving secret sustainability than meet the eye?

Although accusations of ‘greenwashing’ are perhaps of high concern for companies, they are somewhat secondary to the underlying negative perception of sustainability, one that has led to some companies hiding their activities from industry partners. The negative perception is primarily based on two assumptions of what sustainability equates to:

reduced quality
increased manufacturing costs

One of our consultants, Owain Griffiths, posted an article which discussed similar assumptions made by companies unwilling to increase recycled content. But are these assumptions well-grounded in evidence, or are they preconceived misconceptions within business that need to be ironed out? With our knowledge of the use of secondary raw materials and the benefits of sustainability within businesses we would suggest the latter.

We have touched on the issues with sustainability within the B2B sphere, but outside, is B2C faring any better? In many ways, no. As well as sharing the concerns of industry, listed above, it has been established that many consumers believe that products cannot become more sustainable without becoming more expensive. This psychological barrier is seen as another hurdle to overcome for businesses to reach a point of transparency around sustainable activities.

If we apply a hypothesis-led approach that we consistently employ in our projects, we see an interesting result. The single, shared business and consumer hypothesis we present here is that as sustainability increases, cost also increases. However, what does the evidence tell us? RobeccoSAM’s Corporate Sustainability Assessment (CSA) and the Dow Jones Sustainable Indices (DJSI) are combined to produce an ‘Industry Leaders’ report each year, the 2018 and 2019 figures can be seen in Figure 1.

Figure 1: The data from these nearly 60 companies across 24 sectors does not lie. Sustainability and business prosperity can go hand-in-hand.

What the data shows is that all the companies have high revenues as their index market cap values (share value * number of shares) are at least above $1 billion - and stretch to nearly $250 billion. This high revenue suggests that, despite their highly ranked sustainability credentials, they are not running inefficiently nor with overly high costs (at least not ones that negate their revenues from products and services). This calls into question the concept that sustainability improvements and cost rises are linked in business, and certainly challenges the notion that consumers are veering away from sustainable companies. On the contrary, our experience is that pursuing environmental objectives can open up many new opportunities for businesses.

Going forward, accusations of greenwashing may be a risk for businesses that seek to publicise their environmental progress. However, we hope that this will not act to stifle the pursuit of environmental objectives, especially as the misconception that acting ‘sustainably’ is bad for business continues to be dispelled by new evidence. We welcome efforts by businesses to improve their environmental footprint and encourage them publicise their progress. We know that achieving a sustainable model is a journey that will not necessarily progress in a linear fashion. By making this known, sustainability leaders may motivate businesses that are just starting out on their journey.

If you are a business looking to solidify your evidence base to avoid ‘greenwashing’, begin your sustainability journey by drawing up key principles or are looking to utilise Circular Economy practices, please contact Owain Griffiths (owain.griffiths@oakdenehollins.com) or Jake Harding (jake.harding@oakdenehollins.com) to discuss how we can support you in achieving your goals.

Secret Sustainability – Changing the way we view ‘green’