Greenwashing :=
Source: Merriam Webster
Expressions of environmentalist concerns
especially as a cover for products, policies, or activities.
Greenwashing often manifests itself in the presence of superficially ‘green’ (eco-friendly) policies and activities in an organisation, that however are either separated from core business, or have no deliverables and accountabilities associated with them. Often both.
Analogue terminology:
o) Diversity-washing: expressions of gender, sexual, and ethnic, equal opportunity concerns, especially as a cover for policies, or activities.
-> Diversity-washing often manifests itself in the presence of superficially diversity-friendly, equal opportunity policies and activities in an organisation, that however are either separated from core business, or have no deliverables and accountabilities associated with them, or simply are not implemented. Often all three.
–>> Gender-washing: a subcategory of Diversity-washing, expressing gender and sexual identity anti-discrimination and equal opportunity concerns, especially as a cover for policies, or activities.
o) Governance-washing: expressions of good governance concerns, especially as a cover for policies, or activities or bylaws.
-> Governance-washing often manifests itself in the presence of superficial good governance processes – such as the presence of an ‘independent board’, that however at their core have no true influence on the core business. This is often the case in family -owned companies, as well as listed companies with dual-class share ownership structures, where the majority voting rights reside with a very small number of share holders, often even with just a single individual. Examples of such companies are: Facebook, Alphabet (Google), Hoffmann La Roche, Walmart
o) Skill-washing: expressions of meritocratic concerns, especially as a cover for policies, or activities, particularly in – but not limited to – HR and talent management.
-> Skill-washing often manifests itself in the dominant presence of a superficially highly skilled base of people – either in executive positions or also in board positions, with an admirable track record. Who however in practice deliver much less value than their paper track record suggest they would.
Greenwashing and the Governance Gap
While in the old days – barely a decade ago – , greenwashing often happened consequence of an absence of knowledge and awareness, but a near desperate need to ‘do something’, things have change significantly since. Today, greenwashing cannot be divorced from both, board and senior executive responsibility and accountability.
If greenwashing does take place – and this is in my personal, and admittedly somewhat cynic, view happening by far more often than it does not – the reasons are twofold:
- An explicit intent to do so: i.e. consciously and on purpose, example of which would be the case of the Volkswagen CEO.
- The implicit result of other structural issues: predominantly driven by organisational culture, wrong incentives as well as lacking resources. Example of which might be what possibly happened within the Volkswagen R&D teams.
In either case however, there is no doubt that the ultimate responsibility – and accountability – resides with the board: it is their role to ensure that explicit greenwashing is not permitted, and that it does not happen implicitly either as a collateral damage of wrongly set incentives and/or power structures.
But what if indeed the board itself lacks scruple? What if the board is entirely OK with taking on an unethical approach? What if the board is aligned with ‘creative’ ways of implementing none, or very questionable, environmental measures? What if push comes to shove, profit is the only ever valid argument in a board?
#BeCurious, Shareholders and Stakeholders: The Power of Questions
This is the moment of shareholders and stakeholders. It is the moment where their critical questions, their industry insights, and their knowledge of how competitors ‘get stuff done’, starts to play a pivotal role.
How? How to do that when most ESG ratings systems do not dig deep enough to genuinely being able to assess such aspects? [More on that in a different post sometime soon.]
Asking questions, doing research, collecting facts, gaining insights – and sharing such information with equally interested parties, is a powerful, if slow, way to do that: Transparency, accountability to the facts, and aligned collective action does work.
It is slow, but is is a method that ultimately works with even the most reticent of organisations.
[Unexpected side effect? Legislation is increasingly aiming at speeding the laggards movement up by giving ammunition to their shareholders in particular. Being late on legislation costs money. It is sunk costs. Investors hate it. That is precisely why we can expect more environmental and social legislation happening at a much increased rate in the years to come.]
Why? There is only so much ‘greentalking’ a company can do before the pressure of those that have scrutinised the (lack of) results, gets too strong. At some point, even the most convinced laggards ‘have to do something’. Something concrete, and that is a step into the direction required.
Of course they will remain laggards – no doubt about it. But the pain ultimately will be getting too strong not to move.
Ideally, boards define – through informed decisions – the approach and rhythm of their ‘green’ measures. But in the absence of boards that genuinely see the point – sadly still a majority of boards globally – their own greenwashing will come back to haunt them.
Maybe not fast, but no doubt steadily. Just like the tortoise won the race against the hare.
Further learning: The Art of Powerful Questions
Video: The Art of Powerful Questions by Allen Saakyan, TEDxSanFrancisco, 7th November 2018.
