Greenwashing Risks: Prioritising Transparency and Authenticity

At Thankyou Payroll sustainability has been baked into our business model since 2011 and we work hard to ensure our actions match our words. We know that a lot of our clients want to do that in their businesses too, but it can be hard to navigate a sustainable journey.

The Thankyou Payroll Tree Planting Volunteers

Why should you be focusing on Sustainability and Practices that have a Positive Impact?

When we talk about sustainability there are three main pillars:

• Social equity – creating an equitable society where everyone has access to the resources and opportunities they need such as public health, education and human rights
• Environmental health – preserving and protecting the natural environment and ensuring that the use of natural resources now does not compromise future generations.
• Economic success – Improving economic development and growth in a way that helps to improve living standards while retaining a balance with social and environmental impact.

Working towards these goals is important for two reasons.

One – it’s the right thing to do. Our people, communities and planet depend on us working together and finding ways we can do things better. 

But, there’s another reason for focusing on sustainability and impact – it’s good for your business.

Firstly customers and clients are becoming more discerning and are more likely to look favourably on businesses that have good practices. Employees too are becoming more conscious of company ethics and what their employer stands for. That means working to have a positive impact can improve the perception of your business.

And, secondly, measures that benefit the environment like reducing energy usage or going paper-free can also reduce business costs.

But, here’s the kicker….

All of this only works if your practices are sound and your impact is authentic. Coming from a place of inauthenticity, or using sustainability simply as a marketing tool is at best, not going to have a positive impact on your business (or the world around you) and at worst, will cause damage to your reputation.

Dee Harbour, Customer Success Specialist, Tree Planting in Dunedin

What is Greenwashing?

Greenwashing happens when a business pretends that it is more sustainable than it really is. That might be:

• Some blurred marketing, like calling something “inspired by nature” or labelling something as plant-based even though it still contains other synthetic ingredients
• Overstating achievements or using inaccurate or controversial data. For example, Christchurch Airport was forced to drop the term climate positive from its marketing. Despite the claim technically being accurate because the airport had offset carbon from its operations, it did not include emissions from the flights into and out of the airport. While these are somewhat beyond the airport’s control, the perception among the public was still that the claim was misleading.
• Using a good thing in one part of the company to distract from something not so good elsewhere. For example, a clothing company might champion its recycled fibre clothing but fail to mention its poor labour practices for workers who make the garments.

Belmont Regional Park, Porirua

Why you need to avoid Greenwashing

First and foremost – greenwashing stops real progress being made. Businesses may appear to be contributing to solutions, but in reality, they are slowing down the collective effort to make a positive impact.

Greenwashing also brings risks to your brand.

Misrepresenting your business or its products and services, or making false claims can lead to legal consequences. Under the Fair Trading Act in New Zealand, companies can be fined up to $600,000 and individuals up to $200,000 if found to be greenwashing.

Greenwashing also risks bad publicity especially with today’s savvy consumers. In the 2024 Better Futures Report from the Sustainable Business Council and Kantar, 49% of respondents thought the way businesses talk about environmental commitments was dishonest.

People are more informed and more likely to spot an inauthentic claim today. And with social media, it’s easier for people to tell others what they think. This is especially true among younger generations where a higher percentage of people tend to perceive greenwashing and are more likely to call it out.. And it is those generations who will soon make up the majority of the workforce and a large proportion of your potential customers.

So how can you work towards Authentic Impact?

Start with measurable goals: Set clear, achievable sustainability targets and regularly report on your progress. Avoid broad, vague statements — be specific about what you’re doing and why.

Share both your successes and your challenges. Authenticity means admitting where you’re falling short and outlining how you plan to improve. In that same Better Futures report, being transparent about sustainability performance had a higher impact on overall perception of a business compared to simply communicating the good things a business does.

Enlist third parties: That might be an accreditation that helps you highlight what you’ve achieved or a third party who can help you achieve your goals such as a carbon offset scheme.

We’ll talk more about how you can implement impact-led initiatives in an authentic way throughout the rest of the year.