EDM Sustainable Business 2022

European Commission is also planning a “digital
product passport.”
For larger companies, climate-related KPIs
should be the basis of sustainability reports.
Smaller companies under 250 employees may
“voluntarily decide” to publish such information.
The post-Brexit U.K. has already implemented
its own Environment Act for England, Wales
and Northern Ireland that came into effect on
November 17, 2021, to ensure greater resilience,
traceability and sustainability, particularly in
supply chains.
The U.K. and the EU follow different approaches
to combating “greenwashing” claims for products
and services. The EU initiative is complex
and detailed, while the UK approach is less
standardized and not supported by technical
resources or mandatory methods for companies.
In pre-Brexit times, the EU had fixed the future
path in its “Regulation on the establishment of a
framework to facilitate sustainable investment,
and amending regulation.” The paper says that,
for each environmental objective, uniform criteria
for determining whether economic activities
contribute substantially to that objective should
be laid down. One element of the uniform
criteria should be to avoid significant degradation
of any of the established environmental
objectives to prevent “that investments qualify
as environmentally sustainable in cases where
the economic activities benefitting from those
investments cause harm to the environment to
the extent that outweighs their contribution to
an environmental objective.”
The assessment should consider several aspects:
the lifecycle of the products and services
provided; the environmental impacts of the
economic activity itself (including consideration
of findings from existing lifecycle assessments),
taking into account the impacts of production;
use; and end-of-life. Economic activities should
only be considered environmentally sustainable
if they are conducted in accordance with the
OECD Guidelines for Multinational Enterprises
and UN Guiding Principles on Business and
Human Rights, including the Declaration on
Fundamental Principles and Rights at Work of
the International Labour Organisation (ILO), the
eight fundamental conventions of the ILO and
the International Bill of Human Rights. The ILO’s
fundamental conventions set out the human
and labor rights that companies must respect.
Business experts believe the new rules will
closely follow the framework developed by the
German financial regulator BaFin to prevent
investment funds from declaring investments as
environmentally friendly when they are actually
not. The German supervisory authority’s planned
rules set a minimum threshold of 75 percent
for investments that contribute to achieving
ESG targets. Germany is thus taking a stricter
approach than other countries that use scoring
systems or qualitative requirements.
Clearly, the EU has several songs to sing at once
- definitely more than individual companies
that have a power of self-correction. In recent
years, many business alliances have been forged
to take a more effective and clearer approach
against greenwashing, setting strict and non-negotiable
benchmarks for products: for example,
Swedish fintech company Klarna has just
entered into a new collaboration with fashion
sustainability rating platform Good On You to
help customers make more informed decisions
about the environmental impact of the products
they buy. Good On You rates products based
on a scoring system with more than 500 data
points.
This external assessment means that greenwashing
platitudes have little chance of getting
through to consumers. Voluntary rather than
legislative measures could therefore be the more
effective and faster way to curb greenwashing.
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