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Last month, the European Parliament set out to ban environmental claims about carbon neutrality based on carbon offsetting schemes. This has caused ripple implications for sustainability and marketing teams, especially their public-facing approach on how to reach ‘net zero’.

The closer scrutiny by both legislators and consumer watchdogs like the Advertising Standards Authority (ASA) on such claims has come at a time when the global crackdown on greenwashing is forcing brands to reevaluate their labelling and external communications. Recently, the utility of carbon offsetting when used as a tool to balance a business’s carbon footprint has become highly disputed. A recent Guardian investigation claimed that more than 90% of rainforest carbon offsets certified by Verra, a leader in carbon standards, had little impact. Gucci is amongst the high-profile companies now transitioning away from carbon-neutral messaging, having removed this from its website following the decision made by the European Parliament on May 11th. This runs alongside inquiries about the very existence and value proposition of ‘sustainable’ collections as retailers like H&M and Zara discontinue their Conscious and Join Life collections respectively.

The inspection of labels and advertisements peppered with carbon neutrality terminology is part of a wider effort to eliminate misleading environmental messaging across markets. The EU Green Claims Directive, proposed in March, will set out the EU’s first detailed rules on marketing environmental impact and performance. Notably – it states that common phrases such as ‘net zero’, ‘carbon neutral’ and ‘eco-friendly’ would be prohibited in advertisements, in social media posts or on packaging unless they were sufficiently substantiated and verified. Elsewhere, the U.S. Federal Trade Commission (FTC) is soon to update the Green Guides for the first time since 2012 following an extended period of public consultation.

Ken Pucker, senior lecturer at Tufts University whose work is focused on sustainability believes that “the French and EU anti-greenwashing and labelling laws will force companies to better align their aspirations and actions.”

The UK’s ASA released updated guidance on carbon-neutral claims in February 2023, drawing on key principles of the UK Competition and Market Authority’s Green Claims Code. The update outlined that businesses and brands must avoid using unqualified carbon-neutral claims and provide accurate information. They must also state the degree to which they are reducing carbon emissions or are basing claims on offsetting, to ensure that consumers do not wrongly assume that products or their manufacturers generate zero or few emissions.

Director of Complaints and Investigations for the ASA, Miles Lockwood reflected on why greenwashing and terms like carbon neutrality have become a more prominent focus for the organisation. “As the climate crisis has become more urgent, we’ve worked proactively to ensure our regulation remains effective”, he commented.

A research project conducted last year by the ASA revealed that consumers believe carbon neutrality meant that companies were also reducing their emissions when this was not always true. “Consumers were confused by carbon offsets. When the role that carbon offsets played in carbon neutrality claims was revealed, consumers told us that they felt misled.”, relayed Lockwood.

Internal teams responsible for advertising have a responsibility in communicating transparently and accurately, as well as to convey environmental performance in tangible and accessible ways. Lockhart underlined the importance of doing so, “Advertisements shouldn’t suggest that brands are further along that journey than they are. Too often we witness a lack of precision and over-ambition, with firms exaggerating their credentials and lacking evidence or balance.”

How can brands navigate the tightrope of advertising the impact of their products amidst an ever-evolving regulatory landscape of guidance on environmental claims? It seems almost daily that companies across sectors are facing lawsuits for their misleading advertising. Most recently, Delta Airlines has had to pay damages to customers for misleading carbon-neutral statements in campaigns that warranted customers paying a higher price. Others are erring on the side of caution. easyjet and JetBlue have moved away from offsetting entirely and brands like crocs have backtracked on their net zero targets, delaying these from 2030 to 2040. Gucci’s termination of its partnership with South Pole and withdrawal of carbon-neutral messaging probes an interesting question, will this have any implications on having to redraw the lines of carbon reduction commitments at a higher, strategic level?

Brands whose collections and reputations are built on the premise of reducing environmental impacts have to tread lightly in the communication of their claims too. Aileen Lerch, senior manager of sustainability at shoe company Allbirds noted that “With every unclear and unsubstantiated claim made, the word ‘sustainability’ is losing its meaning and credibility.”

Undoubtedly, transparent and credible communications on a product or brand’s performance can build trust. Kathleen Talbot, chief sustainability officer and vice-president of operations at California-based Reformation noted that “If consumers are purchasing an item because it is sustainable, or more sustainable than other options on the market, they deserve assurances that it is actually differentiated and delivers a better outcome.”

A reputation for going against the industry’s business-as-usual fast fashion model means communicating claims has to be done carefully. This is not without challenges. Only last year, Allbirds faced a lawsuit, which was later dismissed, surrounding the company’s environmental claims, with disputes that the communication of its sustainability practices and the low carbon footprint of its shoes were misleading.

The company has labelled every product with a carbon footprint since 2020 and now provides receipts for the carbon and financial cost of their shoes. Allbirds open-sources its carbon footprint methodology and has worked with several external consultants to develop and validate their LCA tool, methodology, and datasets used to calculate product carbon footprints, “These are all verified against third-party standards,” says Lerch.

Like Allbirds, Reformation has built a reputation around sustainability. As chief sustainability officer, Talbot shared that “Regardless of the state of play, it’s our responsibility to be transparent about our sources and assumptions and obtain the appropriate third-party verifications for key sourcing certifications and impact reporting. We’re focused on progress and honesty over perfection.”

The legal and reputational risks of not abiding by new legislation and over exaggerating performance can be significant. Pucker from Tufts noted that “Brands that misrepresent their environmental benefits open themselves up to reputational damage. Equally, an exaggeration of progress can have consequential financial impacts.” He foresees that these new rules will create consequences for a lack of adherence which will, in turn, drive new behaviours.

But will the latest rulings on carbon neutral claims achieved through offsetting have a meaningful impact on the fashion industry? Lerch at Allbirds, argued that “For too many companies, offsetting has been a quick fix that makes the sustainability problem disappear for a while. Recent legislation will motivate industry players to dig deeper into the work of sustainability in more impactful and authentic ways. It is not enough to mitigate or ‘neutralize’ our carbon impact—rather we need to drive it to zero.”

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Amy Nguyen

?  Read More  Sustainability & LEED  ?…To Increase Cycling And Walking In England, Warns National Audit Office Edit Story Forbes Innovation Sustainability Carbon Neutral Claims Under Investigation In Greenwashing Probe Amy Nguyen Contributor Opinions expressed by Forbes Contributors are their own. I write about sustainable business, fashion and supply chains. Following Jun 16, 2023, 06… meaning and credibility.” Undoubtedly, transparent and credible communications on a product or brand’s performance can build trust. Kathleen Talbot, chief sustainability officer and vice-president of operations at California-based Reformation noted that “If consumers are purchasing an item because it is sustainable, or more… Total Engagement: 0