New research from Sensu Insight has delved into the UK public's perception of ESG claims made by businesses, with results that will concern corporations. The study, which surveyed a nationally representative sample of 1,682 UK adults, was carried out in October 2022 but published at the beginning of this year. It found that fewer than a quarter (23%) of respondents take ESG claims at face value, suggesting the overall majority hold scepticism towards such claims. Further, more than 1 in 10 (14%) said that they typically disbelieve claims[i].
Managing director at Sensu Insight, Steve Leigh, said: “The result of our survey reveals a society sceptical of the motivations of businesses. We are increasingly living in a cynical age where accusations of ‘fake news’ make us more likely to question everything that we hear. When such suspicions are amplified through social media, it can feel like every ‘fact’ is being challenged and undermined. This makes genuine ESG initiatives and claims particularly hard to communicate effectively.”[ii]
The subject of greenwashing, which has seen much coverage within the media over the past 12 months, is increasingly impacting consumer behaviour and seeing companies challenged on their ESG claims. Nearly all of Sensu’s survey respondents (93%) said they had seen what they believed to be an example of greenwashing within the last month. The most commonly cited examples were organisations that claimed to be sustainable without any facts or figures to justify the claim (33%), misleading advertising (32%), and false or exaggerated recycling claims (30%)[iii].
In a recent paper by Michael Lee and Robyn Raschke exploring greenwashing in ESG communications, the authors note that in current business communications, the levels of greenwashing may be significant. This could be due to companies trying to generate a positive (but in their words), more often than not, a misleading impression of their ESG performance. The paper also argues that “the growing sensitivity of stakeholders to ESG issues has seemingly encouraged an attitude among firms to try to outdo each other on ESG conduct. Consequently, stakeholders are becoming increasingly sceptical of firms that communicate their ESG performance. Firms seeking to gain or maintain stakeholder legitimacy have greater incentives to use communications to influence stakeholders’ perceptions.”[iv] They go on to add that: “Firms with legitimate ESG performance tend to have stronger trade relationships, better job applicants, greater access to resources, and enhanced financial performance”[v].
In addition to greenwashing, the lesser discussed ‘greenhushing’ (also termed ‘brownwashing’ as in our previous blog), which relates to companies or organisations downplaying their environmental credentials, is also a pressing area of concern for companies. With the demands and backlash around greenwashing, businesses may feel they are at risk of overstating their credentials or are uncertain as to how their business ranks amongst their peers; thus, they either downplay their achievements or fail to draw these out entirely, missing the opportunity to highlight their progress. Additionally, companies are driven by internal and external stakeholders; it may be felt that other features and areas of the business are in line for praise and promotion in reporting, leading to sustainability and environmental achievements being overlooked. There is also thought that greenhushing/brownwashing could be a form of corporate ‘imposter phenomenon’. Given that some industries have a negative history of environmental impacts and practices, companies operating within them today may feel unworthy or out of turn to speak out on their environmental achievements. Likewise, younger companies or those unsure of how their environmental successes actually rate will be far less sure in promoting their achievements[vi].
Yet, the public does want greater transparency, as Sensu’s findings acknowledge- 9 out of 10 (89%) respondents said that they cared about the environmental stance of businesses and brands, and 86% wanted an increase in their level of transparency on environmental matters. Concerningly, just 8% agreed that most businesses currently do enough for the environment. Failure to provide transparency and to address greenwashing concerns can be severely damaging for brands- Sensu’s survey found that well over half (59%) of consumers said they had changed their behaviour in some way because of perceived examples of greenwashing. The most common behaviour change was to reduce the amount of money spent with that organisation (23%), with 15% saying that they have boycotted a brand entirely as a result. Alternatively, whilst a company may not be greenwashing, by greenhushing, it may place itself at risk of attack on a perceived lack of ESG credentials.
With Sensu’s research finding that 30% of the public expects ESG claims to have been exaggerated, alongside 71% stating that they don’t believe the claim is likely to have been verified or checked by an independent expert or regulator, there is a failure to instil trust and credibility in ESG claims. Instead, the public has found independent experts far more believable and trustworthy- “62% said they were likely or very likely to believe commentary from independent experts such as the Energy Saving Trust or similar organisations. Next most influential were international organisations such as the UN (56% likely or very likely to believe), and pressure groups such as Greenpeace or Friends of the Earth (55%)”[vii] As a result, companies could seek to work with independent experts, attain accreditation, or work with NGO’s to meet ESG requirements as well as to increase trust in their ESG communication and credentials.
Crucially, as the survey data shows, consumers want transparency from businesses, this means that communication is key. Trust can be established by keeping the public informed on what your business is doing to address environmental challenges. There will be criticism and challenges, but It must be remembered that ESG is a journey. As such, identifying key goals and showing how your business intends to meet these will help instil confidence in your brand. Subsequently, listen to consumers and act on their concerns while maintaining transparency and opening dialogue.
[i] 50 Shades of Greenwashing Research Report: How to create effective ESG communications : Sensu Insight
[ii] Survey Survey: 7 in 10 Brits don’t believe environmental claims by businesses are credible - edie: 7 in 10 Brits don’t believe environmental claims by businesses are credible - edie
[iii] 50 Shades of Greenwashing Research Report: How to create effective ESG communications : Sensu Insight
[iv] Stakeholder legitimacy in firm greening and financial performance: What about greenwashing temptations?☆ - ScienceDirect
[v] Ibid
[vi] Today the term ‘Greenwashing’ is widely used, but what does it’s opposite, Environmental ‘Brownwashing’ mean? | Zero Carbon Academy
[vii] 50 Shades of Greenwashing Research Report: How to create effective ESG communications : Sensu Insight
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
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