Sustainability has rapidly become an indispensable part of corporate governance. But as companies commit to green practices, a worrying trend is also surfacing: Some corporations are painting themselves as green while failing to back their claims with concrete actions. Numerous examples abound: The UK Advertising Standards Authority (ASA) has recently banned a number of ads from prominent companies, including HSBC for being “misleading” about efforts to tackle climate change. The ASA also banned the ads of Ryanair for the company’s unsubstantiated claim of being Europe’s lowest emissions airline.
Research: How Some Companies Avoid Accusations of Greenwashing
An analysis of 515 companies in 35 countries reveals a troubling trend.
September 27, 2023
HBR Staff/Unsplash
Summary.
Recent research reveals a troubling trend: apex firms in Business Groups often promote sustainability without substantial action. Analyzing data from 515 companies in 35 countries, the authors found that apex firms, especially those sharing a brand with affiliates, engaged less in sustainability initiatives than their lower-tier counterparts. This potential “greenwashing” might be tolerated due to the unique BG structure, where apex firms play communicators and affiliates act as implementers. Despite market tolerance, such discrepancies could harm long-term reputations. For genuine sustainability, firms must ensure accurate communication, inspire affiliates with shared values, diffuse best practices groupwide, and stay attuned to evolving stakeholder expectations. Sustainability is not just a symbolic gesture but a commitment requiring consistent, substantive action.