5 Steps to Mitigate Greenwashing Risks (and Why You Should Pay Attention)
By Marc Ross
Apr 22, 2022
The following is an excerpt from, "5 Steps to Mitigate Greenwashing Risks (and Why You Should Pay Attention)," by Vicente Sederberg's head of Impact and ESG, Marc Ross. It was published on Earth Day by the Cannabis Business Times.
As the U.S. business sector heightens its focus on tracking environmental, social, and governance (ESG) metrics, a growing number of cannabis companies are beginning to factor sustainability and other social goals into their business plans. Unfortunately, in their race to gain ESG bona fides, some are engaging in “greenwashing,” a mistake commonly made by consumer-facing companies across a variety of industries.
Greenwashing is typically defined as making exaggerated marketing claims about a company’s sustainability ethos or distributing misleading information about the environmental impact of the company’s products or services. The definition has recently been expanded to include a broader set of false or misleading statements, and activist investors and state and federal agencies are taking notice—and action.
Greenwashing in the cannabis industry often involves companies branding corporate social responsibility (CSR) programs as ESG initiatives without any real understanding of what an effective ESG program entails. In some cases, companies simply name a diversity and inclusion officer their de facto head of ESG. Claims of “sustainable packaging” based on misrepresentations and misinformation are another common example.
If your company is putting out an “ESG report” with flowery language about its community work and philanthropy or about how it recycles and uses LED lights in its nursery, but it fails to include any real data, benchmarking, third-party assurance, and reporting to regulatory agencies, you might be guilty of greenwashing.