Is the grass greener or just greenwashed?

Consumers may choose to make purchases due to misleading statements, labeling, or advertising. Such tactics may exaggerate environmental claims, provide vague details, or market products as sustainable when they are not.

Organizations can be penalized for greenwashing due to incomplete disclosures. Additionally, omitting materials, such as information on climate risk, could cause stakeholders to infer sustainability goals are further along than they truly are.

Greenwashing claims can be based on inconsistent messaging of environmental-based action. Unclear transition plans and insufficient resource allocation can mislead stakeholders and elicit the attention of regulators.

Companies who fail to make progress on environmental pledges, such as reducing emissions and waste, are susceptible to greenwashing claims. Additionally, leaders must be mindful of “green-rinsing,” which is when sustainability goals are changed before they are achieved.

Internal audit functions can support organizations throughout the reporting journey. They can help enhance the reliability of your sustainability reporting by testing the accuracy of disclosures and metrics.

Before rolling out your sustainability initiatives, your internal audit team can provide insights on best practices related to processes, risks, and controls. This can help structure governance based on reporting requirements.

A well-informed understanding of regulatory obligations and voluntary commitments can help align claims, such as “net-zero” and “carbon neutral,” with the proper substantiation and prevent risk.

Leaders within internal audit can accelerate change by advocating for responsible marketing. Furthermore, the practice can inform the business of red flags, including hidden trade-offs and the implications of natural imagery, to mitigate greenwashing.