Greenwashing: how to maintain control over sustainability claims

The message of the ECGT is clear: sustainability claims that reach consumers must be concrete, representative and substantiated. If they are not, there is a risk of reputational damage, legal proceedings, enforcement measures and loss of trust amongst participants and stakeholders.

Why greenwashing should be on your agenda now

Organisations often underestimate the complexity of the risks of so-called greenwashing, where companies present themselves as more sustainable than they actually are. Statements about sustainability are scattered across policy documents, annual reports, websites, pension schemes, factsheets and communications to participants. Each of these statements can contain a claim that is testable against rules such as the ECGT, which represents a tightening of the Unfair Commercial Practices Directive, and the guidelines of the supervisors ACM and AFM. 

Moreover, regulations and guidelines are changing rapidly. What was a perfectly fine formulation last year may already be misleading today. And the responsibilities? These are often divided across multiple teams: investments, communications, compliance, legal, external parties. This quickly leads to inconsistencies, without anyone having the complete overview.

What changes with the ECGT?

A number of important matters that will change due to the introduction of the ECGT:

• Generic environmental claims, such as 'climate-friendly' or 'energy-efficient', will be prohibited if you cannot demonstrate recognised excellent environmental performance of the product.
• Forward-looking claims, such as that a climate target will be achieved in 2030, must be supported by an implementation plan with interim targets and independent verification.
• Climate claims for a product based on compensation of greenhouse gas emissions outside one's own value chain will be prohibited.
• Statements that appear to relate to the entire product but actually only apply to a component of that product will be prohibited.
• Sustainability labels may no longer be used unless the label has been verified by an independent party according to a certification programme. 

Precisely with all these new obligations, as a director you want to be able to demonstrate at any time that your organisation's sustainability communications are correct, consistent and compliant. An annual review is no longer sufficient. The ECGT assumes continuous monitoring. 

Work to be done for directors

There is therefore work to be done, especially now that the ECGT has also been implemented in the Dutch Civil Code. Please note, the guidelines of the AFM and ACM have not yet been adapted to the requirements of the ECGT. This requires vigilance from organisations and directors. When drawing up sustainability claims, it is therefore advisable to keep the ECGT at hand. 

Compliance pays off, as evidenced by earlier greenwashing cases at home and abroad. The risks of non-compliance are substantial, such as active intervention by the Advertising Code Commission, civil proceedings by NGOs or consumers, enforcement by supervisors with high fines and mandatory adjustment or removal of claims. And all this under the magnifying glass of the media, which regularly pay attention to this subject. 

With the ECGT, the question therefore becomes even more: can you actually substantiate the sustainability claim you make and, where necessary, have it verified by an independent third party?

Our approach: from insight to assurance

To gain better control over greenwashing risks and establish a structural approach to compliance, it is important to work in phases. For this we recommend an approach in four steps: 

1. Insight and assessment
   Begin by establishing an assessment framework, based on laws and regulations, supervisory expectations and legal interpretations. Not only the letter of the law counts, but also how supervisors apply it in practice.
2. Analysis
   Then analyse selected documents systematically and carefully on the basis of the assessment framework. You must repeat the analysis periodically, so that you are not dependent on a one-off snapshot but have ongoing insight into your risk profile. This enables you to secure the continuous monitoring obligation and manage greenwashing risks.
   
   For the analysis you can use artificial intelligence (AI). However, use a well-developed, specialised and extensively tested tool to prevent incorrect results.
3. Risk insight and prioritisation
   Record all points of attention in a structured overview, including an assessment of the greenwashing risk (low, medium, high). This allows you to prioritise in a targeted manner, make responsible choices and follow up on improvement measures effectively.
4. Strengthening of governance and processes
   You use the results to strengthen your governance, processes and internal controls around sustainability communications. Think of sharper reviews, clearer responsibilities and a periodic assessment cycle. In this way you secure compliance in a sustainable and demonstrable manner and you, as a director, have the certainty that you are fulfilling your responsibility.