How to avoid greenwashing – SPR/RE Women joint seminar
18 April 2023, Freeths, London W1

Transparency is everything
Greenwashing, the practice of painting an organisation’s policies or actions as being greener – that is, more in line with an ESG agenda – than they really are, is nothing new.  But with climate change, biodiversity and social responsibility ever more important in the eyes of investors, the pressure to be seen to be green can be intense.

Speaking at this joint SPR-RE Women breakfast seminar, Jessica Pilz of Fiera Real Estate and Katie Whipp of Trustek both asserted that to avoid greenwashing organisations need to emphasise transparency, providing as many metrics as possible to give a clear view of what they are doing in the ESG area and where their strategy is heading.  All the speakers agreed that the risks associated with greenwashing can now be massive, not just legally due to increasing regulation, but perhaps even more important reputationally. An example of this was the recent case of H&M, where apparently detailed statistics on the sustainability of products were found to have been used in a misleading way.

Iona Silverman of Freeths noted that even when firms want to make honest claims about the sustainability impacts of their activities, there is still a danger that they could be inadvertently misleading.  As Sophie Taysom of Keyah Consulting suggested, this can often stem from a genuine lack of understanding of the issues involved – for example, there may be an overt commitment to achieving Net Zero emissions by a certain date without having a plan of how to achieve that or even a realistic measure of current emissions.

However, Pilz and Whipp also highlighted that concerns about the risks linked to greenwashing have led some organisations to over-react by resorting to ‘green-hushing’, that is consciously not trumpeting their ESG-related achievements for fear of the reputational risk of possible exaggeration.  Taysom stressed that another issue was that success could be difficult to measure in areas like social impact, but that here too transparency in describing activities is key.

In the ongoing discussion led by SPR chair Alex Dunn, considerable attention was paid to the effect on real estate of the EU’s SFDR regulations, which are aimed at eliminating greenwashing from private vehicle information. Pilz proposed that the regulation has ensured that the issue is taken seriously by real estate managers, although many of the provisions have not been developed with real estate in mind.  Whipp noted that it does little to address the key issue of transitioning assets to become more carbon efficient or the importance of reflecting the impact of carbon embodied in buildings.

Answering a question from the audience, Taysom admitted that there remain difficulties in working out precisely where a property lies on a path towards Net Zero, partly because the definition of carbon neutrality keeps changing as more metrics become available.  However, the speakers all agreed that that organisations should do their best to embrace sustainability and be transparent about what they are trying to achieve.  Real estate CEOs are clearly focusing ever more strongly on ESG as one of their principal performance targets, although financial performance remains paramount.

Wrapping up the session, Dunn asked what is the most important step that firms can take in order to avoid greenwashing.  Silverman stressed the need to be specific when claiming to be green rather than making broad potentially meaningless statements, and to back up claims with relevant data.  Taysom emphasised the importance of having a clear strategy and also a willingness to listen to employees who call out greenwashing within the organisation – there could be a temptation to ignore such comments.  Whipp suggested that it was crucial to understand your own portfolio as each real estate asset is unique, and also to bring in the right talent to enhance that understanding.  Pilz concurred, noting that even smaller organisations can afford sustainability expertise if they are willing to be imaginative, perhaps recruiting on a part-time or consultancy basis, as had been the case with one of her recent positions. 

Tim Horsey