Greenwashing: How can you tell if a company is actually ethical?

Paul Hargreaves, author of Forces for Good, explains how brands can ensure they are truly purpose-driven, and have people and planet at heart.

greenwashing

As we approach the third decade of the 21st century, many companies know they need to sharpen up their act on both how they treat their people, the people in their supply chains and the people of the world through their environmental policies.

However, some companies are better at talking the talk than walking the walk – this is known as Greenwash. The question I ask here is, “Have they actually changed their DNA or are they really still focused on the single bottom line of profit, rather than the triple bottom line of profit, people and planet.”

John Elkington, the creator of the term ‘triple bottom line’ over 25 years ago, aired concerns in a paper in June 2018 about companies jumping on the purpose-driven bandwagon to try and appease consumer and investor priorities. He said, “The triple bottom line (TBL) concept has been captured and diluted by accountants and reporting consultants. Thousands of TBL reports are now produced annually, though it is far from clear that the resulting data are being aggregated and analysed in ways that genuinely help decision-makers and policy-makers to track, understand and manage the systemic effects of human activity.”

So, how do we find out whether a company is truly purpose-driven and has people and planet at heart and not just profit?

Truly purpose-driven companies will have purpose embedded throughout all levels of their company. Just as you can take a stick of rock and cut it at any point, so it is with a purpose-driven company: cut the company at any point and see their purpose written there. In a truly embedded company, over time, purpose will be communicated from the bottom up, not simply top down. Employees will have their own stories of what purpose means to them and how they have interacted with customers and suppliers along the lines of that purpose. A growing number of companies are choosing to be assessed how good they are for the world through becoming B Corps. An important part of the B Corp Certification process is now to interview employees to see how embedded the purpose is.

Second, employees need permission within the culture of the company to challenge management when they feel that they have moved away from the values of the company. This happened at Google in April 2018. News surfaced that Google was working with the US Department of Defence on drone software. Google employees were outraged, and 3,100 put their name to a letter to Google’s CEO, Sundar Pichai. The letter demanded that Google cancel the project, saying that the company should not be in the business of war, invoking Google’s ‘Don’t Be Evil’ motto. One of the reasons the Google situation escalated so dramatically was that the company hadn’t been completely transparent with its employees.

The third way of ensuring values are embedded within a company is to base hiring and promoting decisions primarily on values. In the US tech company Zappos, all new employees take a two-week induction course on the company’s values. After this the new recruits are offered $5,000 to leave the company if they do not believe in the values. Values can also be integrated into the promotion process. Another example is the car company, Toyota, whose employees have two annual assessments; one is on their adherence to the company’s values, and the other is on their performance for the year. Importantly, promotions are based only on the values assessment.

Finally, it is important that there is complete transparency in the measurement of the values in annual reports. If you pay employees a profit-based bonus at the end of the year, ensure that the way this is calculated is completely clear to the employees. At my company, Cotswold Fayre, we have a whiteboard in our office and every month the revenue and profit figures are written up, so everyone (including visitors) can see how we are doing against the financial goals for the year. Setting carbon-reduction goals and measuring how you are doing against them requires a fair degree

of extra work but should be done as part of your environmental purpose. It should be the same with all aspects of purpose. If there is not complete transparency, then there is a danger that doubts may permeate throughout the business. Transparency from the management team is essential to ensure that promises are kept to and communicated by those representing the company. Any doubts and distrust from consumers are instantly dissolved by complete transparency, which will also expose the greenwash in other companies that are just going through the motions.

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