With the Government having set a legally binding target to reach net zero by 2050, start-ups have been quick to recognise what customers want from them when it comes to sustainability.
In 2022, the Financial Conduct Authority (FCA) found that 74% of adults agreed that environmental issues were really important to them and 79% agreed businesses have a wider social responsibility beyond simply making a profit.
With so much public will, and with smaller businesses accounting for almost half of all greenhouse gas emissions from UK businesses, the advantages of every start-up being ‘born sustainable’ are huge.
Some businesses however engage in false marketing to make their products seem more environmentally friendly than is actually the case.
This is called greenwashing.
What is greenwashing?
Greenwashing, also known as "green sheen", refers to a kind of practice where companies may not be entirely truthful about the eco-friendly nature of their products or services.
A company engaging in greenwashing may make claims in their marketing materials that appear green and sustainable, but in reality, those claims are not entirely accurate.
This not only misleads customers into thinking they're making environmentally conscious choices, but it could also potentially harm the environment.
In the long run, it may discourage other businesses from nurturing responsible environmental practices and maintaining commendable corporate sustainability.
The golden rule to remember is that just because a product’s label says that it’s environmentally conscious, or eco-friendly, doesn’t mean its necessarily true.
How can a Start-up avoid greenwashing accusations?
There are a number of steps a start-up can take to protect themselves from accusations of greenwashing.
Honesty and transparency
Explore certification
Understand your supply chain
Honesty and transparency
It seems straightforward, but the first step to ensuring your business cannot be accused of greenwashing is to make sure all of your environmental credentials are fact-based and verifiable, ideally by an independent source.
Greenwashing typically uses language, not numbers, so committing to publish the statistics behind your claims is key here.
Always check your marketing materials are not making claims that can’t be backed up if a customer asks.
Explore certification
It can be a good idea for a start-up to look to a third party to verify the high standards they set for themselves when it comes to sustainability.
There are a number of these bodies that a business can apply to for accreditation to support their sustainability claims.
A good example of this is the B Corp scheme which businesses use to add weight to their ESG (Environment, Social, Governance) efforts in the eyes of consumers.
ISO 14001 is a form of accreditation that offers guidance for businesses looking to measure and report their impact on the environment.
The LEED rating system can help start-ups get their buildings accredited for environmental performance, on a scale from certified to platinum.
Learn more about sustainable certification schemes.
Understand your supply chain
It might also be a good idea to look at smaller local suppliers in addition to larger ones who may have less of an environmental impact since they’re physically closer to your business.
Read our guide on how to build a sustainable supply chain.
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Disclaimer: The Start -Up Loans Company makes reasonable efforts to keep the content of this article up to date, but we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. This article is intended for general information purposes only and does not constitute advice of any kind, including legal, financial, tax or other professional advice. You should always seek professional or specialist advice or support before doing anything on the basis of the content of this article.
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