Avoiding the pitfall of greenwashing

As businesses race to demonstrate green credentials to key audiences, accusations of so-called ‘greenwashing’ are becoming increasingly frequent. With climate activists and campaigners now actively holding large companies to account, attempts to look green through easy wins or poorly thought through initiatives can be just as damaging as failing to act.

Alongside the damage to brand and public perception, accusations of greenwashing now carry with them the potential for active disruption to a business from growing numbers of climate protestors and activists. They also increasingly bring with them the risk of a wave of negative publicity.

From the general public through to climate-conscious investors, satisfying the dramatic sustainability improvements expected while allaying the growing cynicism surrounding greenwashing is a challenging balancing act. Employing strategies, even with the best of intentions, that could be perceived as greenwashing is opening yourself up to criticism down the line as climate campaigners scrutinize sustainability strategies ever more closely.

What is greenwashing?

At its heart, the accusation of greenwashing is that an organisation is being deliberately misleading to make them appear greener than they really are. As increasing numbers of businesses make dramatic claims of switching to 100% renewable energy, often seemingly overnight, how they go about achieving this is coming under more scrutiny.

In one example, last year one energy supplier, a subsidiary of a global oil company, announced the switch of their 700,000 customers to 100% renewable energy. Previously, they had derived just 3.7% of their energy from renewable sources. Green campaigners and industry commentators were quick to point out the discrepancy.

In this case, and a growing number of others, the reality is that while organisations make the claim of 100% renewable energy, often no contract exists to ensure that the energy supplied comes from renewable sources. Instead, the claim is based on the purchase of surplus ‘Renewable Energy Guarantee of Origin’ (REGOs) certificates from energy suppliers.

This use of REGOs is far from the only example of practices many consider to be energy greenwashing. Ultimately, environmental claims that are not backed up by scientific evidence or third-party verification increasingly risk doing more reputational harm than good in the long-term. If a renewable energy overhaul seems too good to be true, it probably is, and key audiences are increasingly aware of it.

A practical solution

Growing environmental awareness means that the only sustainability strategy that offers an enduring solution is one built on science-based targets, provable claims and transparency. Getting to grips with how your organisation is improving sustainability and ensuring that everything is in order now is far preferable to it coming to light through aggressively being held to account by climate campaigners. However, effective clean energy generation and other sustainability measures come with their own challenges, not least one of cost.

In an ideal world, perhaps every business would have access to their own, on-site renewable generation. While this isn’t practical for everyone, the growth of Corporate Power Purchase Agreements (CPPAs) offers many organisations the advantage of accountable, traceable sourcing of green power.

CPPAs have evolved for more than a decade into an energy solution that offer the benefits of price certainty, certified low-carbon sourcing and protection from the price volatility associated with commodity markets. They also frequently offer an overall cost reduction.

A long-term contract, typically ten years, a CPPA sees a business agree to purchase low-carbon energy directly from an energy generator. Fundamentally, they align the needs of a generator with those of an end-user, providing benefits to both. Generators secure off-take certainty to ensure project bankability with an investor, while end-users secure guaranteed, clean energy at an agreed, long-term price.

Supporting renewables

CPPAs provide direct financial support for identifiable renewable energy projects, in many cases securitising the investment needed to get new capacity built. In one recent agreement, two new onshore wind farms will be built by ScottishPower Renewables to provide sustainable energy for Amazon and Tesco as part of both corporates’ net-zero strategies.

Like with other recent CPPAs signed by major corporates, including members of the RE100, these agreements demonstrate long-term commitments to supporting the growth of renewable energy, rather than short-term solutions more likely to be perceived as greenwashing. Getting your house in order in terms energy efficiency should always be the first port of call when looking to tackle decarbonisation, but CPPAs provide a useful additional option in the journey towards net-zero.

BiU have successfully negotiated CPPAs on behalf of major corporate clients and can help your business to navigate the complexities of putting a similar agreement in place for your own energy supply. As well as offering the stability of price and security of supply, it also provides demonstrable evidence of true commitment to sustainability.