Greenwashing: the EU reaches a deal on corporate sustainability reporting requirements
What is greenwashing?
Everybody talks about greenwashing, but what is it?
In 1986, environmentalist Jay Westerveld coined the term “greenwashing” after the hotels’ policy “save the towel”: this policy did not have an impact on the environment, but it helped hotels save money on laundry by asking guests not to change their towels unless they were dirty.
Greenwashing is a marketing strategy that aims to make a company look more environmentally aware and friendly with no true environmental impact.
Examples of greenwashing are tags made with recycled paper or green labels that make you think a product is sustainable, even if there is no proof.
Greenwashing is bad not only for the planet – no action is taken – but also for consumers and investors, because this kind of marketing strategy is misleading.
What can we do about greenwashing?
Greenwashing: the EU reaches a deal
In this context, the Corporate Sustainability Reporting Directive (CSRD) aims to bring more transparency to citizens, consumers and investors.
On top of this, the European Parliament and EU governments have reached an agreement requiring companies to establish further transparency in corporate sustainability reporting.
This agreement is pending the formal vote by EU states and parliaments.
Who will be concerned about CSRD, and when will it take place?
All large companies that meet the criteria listed in CSRD must be compliant with the new legislation.
Companies with over 250 staff and a total turnover of 40 million euros will need to disclose their environmental, social and governance risks and opportunities. Smaller companies will need to comply with different reporting standards voluntarily basis until 2028. These disclosures (sustainability and financial reports) will need to be externally audited.
Furthermore, CSRD compliance starts soon: by 1 January 2024, companies must submit their report for the 2023 financial year.
Companies that do not fulfil CSRD requirements should expect significant sanctions.
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