Greenwashing; What is it and how to spot it, with Nikos Avlonas, CEO of CSE

0:03 But also, that's why you have a history ratings. You know, there is two ratings and where many types of is de-rating. They provide a third party evidence about the rating of your company. So when in third-party rate your company, usually they get evidence about the level of the writing. So one way is the ESG ratings another way. Is screening. So a Lot of investment funds, pension fund. For example, we have ESG screening themes where they you know, they do a lot of due diligence about the words actually doing and what you're not. So we have all the data right on back and it's important of course before they take an equity or invest in the company. So we know more information and there's so many other initiatives like, third-party check third party audit, you know over so many different tools out there. Welcome to the environmental transformation podcast where we talk with industry leaders, climate Champions and sustainability professionals, who are making an impact in their businesses.

1:18 Today, each leader solving complex challenges and provide Solutions within the respective areas of expertise. And here's our host, Sean Grady. Welcome to the environmental transformation podcast. I'm your host, Sean Grady and today's guest is Nicolas vilanis. He is the CEO of the center of sustainability. Next. Lentz how you doing? Nico is morning. Thanks on for the kind invitation or more time. It's always a pleasure meeting you and Sir more insights about what's happening on sustainability, work. This is great. Yeah, no. And you know what to our listeners want to wish everybody a Happy New Year.

2:01 We are We're starting the new year off, right? We've got some great topics and interviews coming, but today's topic is greenwashing and what is greenwashing and and what, how do you spot it, you know, what are the challenges with companies? That's what we want to get into today, so I couldn't think of a better guest Niko's, then you to come and help break down greenwashing for our listeners, especially as it revolves around, you know, sustainability reporting, and things like that for companies, and Let's dive in and talk about greenwashing and give our listeners a little bit more about. You know what it is? But before I do briefly just give the listeners a bit of background on who you are for the new listeners, who may be do not know you Niko's and what you do with.

2:48 Yeah, thank you so much. Founder and president of the center for sustainability and Excellency. SE we are a global leaders in educating c-suite Executives, and sustainability professionals. We have trained over 8,000 students. Professional so far that represents the ninety percent of Fortune. 500 firms in 90 countries, five continents and more or less most of the government's in this countries so we qualified professionals to play the role of stability and make the change of the same time. We do a lot of research on sustainability and ESG issues, especially in North America and that we always try to do.

3:31 Fi what are the key trends on sustainability how he has Z and profitability are get connected and of course we provide services consulting services to Fortune 500 companies in North American bird as the globe. That's great. Well, thanks for giving us and our listeners, a bit of background on CSE and let's talk a little bit about, you know, this greenwashing, let's break down what greenwashing really is. I most Most people listening may know, but let's let's let's break it down for the listeners. It might be a little new to the topic. Yeah, it's really easy to Define greenwashing because it's about the misleading consumers. And you know, not only consumers investors clients, any kind of stakeholder on a green aspects of the product or a company. So that is about greenwashing and this about misleading is about cheating.

4:32 Yes, it's like basically saying you're you're you're doing, you're selling a product that might be green but it's not right or you're doing environmental practices with your company to say your sustainable but you're not right? So it's that misleading misrepresenting actual practices or products you're selling services right now. Let me give you an example showing for example. Exxon Mobil. And Chevron vert considered to be one of the climate leaders by Several magazines and they get several Awards, but it has been in the defined identified as greengrocers, because only 17% of their Investments is a renewable energy, okay?

5:17 So you can see immediately that, you know, how you can be a climate change leader and the same time you contribute to climate crisis, it's it's you know. Yeah. Right and I think I think for some companies like that and then the Energy sector. There's a bit of some challenges for them because, you know, their Core Business is generating energy and supporting the society with the products, right? They have to do that because we can't get off of the products that they're producing because it's, you know, we've been so dependent upon it. So they're kind of a catch-22 a bit, but they're also trying to make a change to be more environmentally friendly to. So I think that's a struggle, right? Yeah.

6:01 There's some didn't come. When it's better than new green Boston. For example, Unilever, we, you know, we all know Unilever is that giant, the support any kind of initiatives against, you know, plastic pollution. And at the same time, Reuters recently identified, that we're doing lobbies loving in third-party countries to allow single use plastic. Wow. Yeah. Against their interests. So you can see you know how On behavior and communication is, it's not involved with the actual actions, you know? Every company service is also misleading, you know.

6:42 I'm not telling you the truth. I'm lying to you. That's pretty well. When we talk about some, you know, ways that companies are knowingly misleading, you know, consumers, let's dive into how they do this a bit, you know, like what are some of the strategies I think that probably companies take to to mislead Yeah, so first of all, the market theories of the company including the marketing agencies, right there, not only external collaborators. We're going to attract consumers, of course, and make products more appealing. That's their job made. Everybody wants to be green these days. So, they're capitalizing on, hey, it's a green product, right? Green is appealing and nobody cares about the statements. They do are accurate or are misleading or not. Gray but lying.

7:33 So we do that through packaging, you know information, we provide food, packaging for information, we provide them ads through social media, through videos for so many. They use any kind of communication channel to do brainwashing. And there are two types of green moss in there, the intentional greenwashing and the, it's also the unintentional greenwashing. So, there's always two. I would say that the vast majority Authority is the intentional gotcha, gotcha, right? So marketing is a thing but like how about greenwashing and say their sustainability reporting? Or I mean that's more of a direct like level. Yes, this is completely intentional. So when we're talking about this level it's a and intentional. So we're talking about organizations that they are, you know communicate that they comply with particular standards for stability reporting.

8:32 About Waste Management about greenhouse gas emissions reduction, and so on. But at the end of the story, they don't actually do that and they don't receive any third-party check or assessments over his lack of evidence. It seems to me that we would be a pretty challenge for most companies especially today, when most big corporations are needing to really provide sustainability reporting, but I think the the ability of too To get their hands on the data, right to properly summarize. It guys, got to be kind of challenging itself if they're just starting out, right? Absolutely. Yes. And that's why we have AC rating providers but the what they do is that they check the data, we check the evidence of this data and then they decide about the rating of a particular company and and, and this is truly important because you can really clarify, if there is true evidence or this is, you know, just for munication with no verification.

9:33 And this is the difference between reality and green goes in or manipulation. Hey, have you been looking to skill up and become a certified sustainability? Professional. I've had been wondering where to start. Well, the center for sustainability and Excellence offers in person and online certified professional development programs. On topics such as sustainability and corporate responsibility, sustainable development and circular economy in global reporting initiative. Standards. If you want to maximize your company's impact and become qualified with the latest knowledge in the field. Old check out cse's website for more information on courses, and cost to become a certified sustainability.

10:18 Professional at www.csiro.au, net dot org. That's www.csiro.au, net dot org. You know, when this this occurs in companies, you know, got imagine, you know, especially when it's knowingly happening, you know, who's typically responsible for this this Of accurate reporting, either the sustainability process, or the product benefits of the environment. The mean, who ultimately is responsible for this mysterious responsibility for were departing, is to the CEO of a company. It's straightforward.

10:59 So at the top, I mean, that's the bottom line, if he is not, or she is not connected or invested into the operations, at a granular level in a sense, right? Just to know, and I'm sure that they've got deputy He's so to speak that are managing these aspects of their business, but they need to know that they can rely on those people in a way that this information is accurate because their stamp of approval on it. So to speak is yeah. Is what Valerie companies? Yeah. What they're doing. Right? Yeah. And there's a risk that can really affect its company reputation and also its reputation things clients, which is, you know, it's going to be significant risk to button. We have seen several cases happening like that, where they see, obviously is not the word, but at the end is his, or her responsibility to be aware about what's happening and about the validity of the data and the transparency, you know, the level of Parents about the disclosures, they're actually providing to the public and returning about listed Community, right, where we have a lot of responsibilities to their shareholders to investors.

12:06 So it's it's it's really important there. Well, let's talk about the reputational risk of some of these companies that they get caught up in greenwashing. I mean, I was recently looking online and just reading some articles, but, you know, Walmart recently was Find about, you know, two million, three million dollars coals, which is like a clothing store. They recently got fined about two and a half, I mean, by the FTC, right? So for misleading consumers, so talk about, you know, this is real, you know, fraud so to speak in a way, right? Yeah. I mean, to be honest, in order to avoid greenwashing, you there are two aspects, you need, consumers, education. And and now everyone is you need very clear and And straightforward legislation against that from FTC from SEC, from all these.

13:01 You know I didn't see the need to be very straightforward about the rules and what you should avoid and this is not necessarily happening right now. So you know, million dollars company can easily declare something and it could be green washing and the SEC role should be, you know, to penalize this company. So the risk here for companies is obviously it's this, you know, potentially finding you know, receiving a civil penalty of some sort for misrepresenting their green positions in the business but what about, you know, the company's risk for the investor?

13:43 I mean like an investor sees this and says hey look this is not a company, I want to invest in because of your greenwashing practices. You haven't met the expectations of honest report. What does that do to a company's stock value? Yeah, that's exactly the case. This is the highest and most important part of greenwashing, where shareholders, you know, with through the stock price and investors are get affected by greenwashing. He you created the Pioneer legislation in 2022, were all the financial sector should declare what kind of Investments are going to. To do, and they classify the type of Investments are going to be considered green.

14:29 So there is no gray area anymore. So this is not everything, but this is a way forward for focus on investments that are clearly. You know, Green sovereigns nuclear energy is going to be considered green by 2025 and afterwards. Is now going to be considered Grace? It's the sense natural gas natural. Us is considered green today under this legislation, but in five years from now is not going to be considered green. So it create rules about what is green and what is not. So we're that no 33 looms of Investments should put their money and when visit avoid getting their money. So I believe this is a significant legislation and already in Asia.

15:16 All the Asian Pacific Islanders they have started to do a copy and paste of this legislation because they understood how important it is for For the future Investments. Well yeah, I mean so are there rules or guidelines in place to prevent the green washing from happening? And if so what are they, you know? Do they have any teeth? No, that's the answer. So no real true liberal arts. Same time if you are misleading, arrived, consumers, your competition can go against you at the Diamond can put you in the court above line, not necessarily right for green housing, but for all the cases, including green goes in, which is, which is obviously happening, right thing broke all over the globe, but this is not a specific legislation for greenwashing.

16:10 So we need a specific legislation to clarify things. What is green, what you should avoid, and what you should, how you should, you know, avoid misleading, consumers, public. With anybody? Yeah, I think, I think most consumers now. There's a huge movement in any investment Community to, you know, impact investment, I guess, is what we're calling it at, you know, where they want to invest in green funds around the globe and you know most of those types of funds now, are there still providing a good return on the investment so to speak for the investors compared to With the blue chip type companies who aren't quote-unquote as green, but most people are wanted to really put their money where their mouth is when it comes to Green investment because they're passionate about it. They think there's a societal benefit and, and that, you know, and environmental benefit and also an economic benefit, right? So I think, you know, getting caught up in a company that's not, you know, that is basically is doing green washing, and, and it's against your beliefs, that that's where People are really having some heartburn.

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18:21 What types of green Investments decisions are being made? You know, I mean, are you familiar with this type of an approach for the green investment approach, to picking a stock or picking a mutual fund? Or, you know, I think there's like I said, there's a huge Trend in this and and I think these fact Checkers and the investment Community are really looking at these companies for the greenwashing, you know, actions so to speak for they can prove in the be part of their their funds. Yes. Yes, we have noticed but there's a progress towards this direction because everybody wants to know more about what's happening out there and I think it's in the right direction, but also, but why you have AC ratings? You know, they see ratings and where many types of is generating the provide, the third party evidence about the rating of your company, so when and third-party rate your company, usually, we get Then above the level of the writing. So one way is the ESG ratings another way is screaming. So a lot of investment funds, pension fund. For example, we have esz screaming themes where they, you know, they do a lot of due diligence about words actually doing and what you're not.

19:43 So we have all the data, right? And it's important of course, before they take an equity or investing in the company. So we know More information. And there's so many other initiatives like, third-party check third party audit you know, over so many different tools out there but not likely used. I mean, it's got to be I think one of those evolving criteria or screening, you know, the evaluations where companies are investors are starting to really pay attention to it more. But I was reading an article prior to the Our interviews had 58 percent of the investors in a recent survey by invest Topia and treehugger indicated, an increase interest in ESG investments in 2020.

20:31 And nineteen percent reported using ESG considerations in selecting Investments. How would green washing affect these investment decisions? I mean, they're going to it would really, you know, if you're an investor and you know this I mean your you want to do a green investment? I think it's really hard for these investors to probably get this information at your fingertips. Right? Exactly. So that's why this investors, they either have to use the ESG rating providers. You know. Who are there? Any parts? Yeah. They're movies. You know, you know, very well known. Okay, Daisy, no sustained. A latex msci SNP, 500.

21:16 You know, they all do this job. I'm not going to use the term perfect but, you know, it's better than nothing. Right? And and but what you mention is why the Europe is doing a lot with the new legislation on EU taxonomy as we call it because they're going to create clear rules and say okay this you know if you invest in our no solar panels This is considered the green investment. If you are I don't know if you are. Sorry, investing hydrogen. It's not a great investment. The hydrogen to be green. There is a classification of green hydrogen before you make it a great investment because the other hydrogen is not considered green at all.

22:03 So, no, just give you an example of rules of what and classification of type of activities that we investors should or could You know, invest more money in can feel sure. But, you know, there is no greenwashing or gray area there, right? Wow. Okay, so a lot to take in here, when it comes to evaluating companies in there, they're green claims. So to speak in these rating systems are one, which is good, but how would a normal person, you know, spot, you know, greenwashing just, you know, from a consumer perspective like if you didn't really have you didn't have, you know, the rating at your Estimate your hand, you know, you have nothing Spot It. Yeah, it's about the education.

23:06 It's about information is above knowledge in a very complicated area, right? When we're talking about packaging, it's impossible to read anything on packaging today. Honestly, I mean, you need to know everything I believe for greenwashing. If you have an understanding of the basic things of sustainability. If you take one of the courses of CSA, for example, and where many levels of course, of course, is where the day, Basic the most advanced and so on, I believe you can be able to easily after one course to classify. I would say, in seconds, a gringo seeing activity, extremely easy, for example, you know, is it Tesla green car? Can you can Tesla declare, that is a green car. And my answer is no, this is obviously heavy greenwashing by Tesla because only according to MIT studies and sir, Elaborate on this only when you know the energy you use during you know the life of a car is bring your plan and see and if also a production of the car is taking place through renewable energy and so and so on and it is so many other parameters. Then Tesla could be or any other EV, right? Not only Tesla, but that's like, I was being promoted as green card.

24:24 That's why I'm using this example could be considered as more sustainable solution of an existing, you know, vehicle, Us but we use. So it's not a single as it seems. So, he is cannot declare as grain as if anybody declared that immediately is doing heavy greenwashing. Well, that's interesting. You bring that up because I mean, that is where a lot of the automotive Industries, pushing to get consumers to buy their product, because it's a more sustainable way of, you know, You know, mode of transportation. But yeah, some, yeah, if you see that from the perspective of getting away from fossil fuels, yes it is a sustainable way.

25:14 But, if you see the numbers CO2 emissions, right? During the creation of the vehicles, auction, actually occurring materials, and think the end of the life. Yeah, not necessarily green. So, You know, that's the, that's that full life cycle analysis that needs to take place when you assess, you know a green product from its, you know, Inception to, you know, completion. And and that is very interesting, you bring that up because I think people are losing sight of the real impact of of, you know, producing a what would be perceivably a green product, right. But there are still CO2 impacts and emissions and and and you know, - things that happen in the in the development of manufacturing process that aren't really factored into that assessment.

26:05 Yeah. Yeah. But they want to clarify is that if these for me are important because you're moving away from fossil fuels as an industry. So from this perspective, it is important. So we can overrides a little bit of some of the negativity around the greenwashing claims, because the overall benefits better than. Yeah. The offer of Yeah, the marketing guys that should be extremely careful. So we cannot communicate. It is as green mean. This is definitely a lie. Okay. Are we get like that's hard to do? Yeah, I can see what you're saying there. It's hard to argue with that. I mean, and I think from I did an episode, matter of fact, the last episode we did was with a company who is doing a lot of This research on consumer products called Fetch and benches. A Plug into, you know, maybe your online shopping experience, where you type in a product and they will tell you, you know, is it green or not?

27:07 Green is it more sustainable than other products? I mean, these are solutions that are helping consumers, figure out whether things are not green or green. And so, you know, when I interviewed the CEO of fetch Lizzie horvitz, I mean, she really kind of explained how her her products works and, and how that's really affecting, you know, consumers and how they're helping and make them more. Decisions, right? I mean, that's one way. Obviously, you can go to look out, look companies up and, and in fact, check, but I think that's the problem. People don't have time, they don't really have the time. Yeah, really good enough. It could be, you know, could be a simplified up, let me use this way because it's extremely complex issues, everything we discussed.

27:50 I think it could be, you know, a good possible, you know, solution for consumers. And as CSA, we're going to support with A huge network of you know, so many thousands of professionals. But we have educate. And we also advise through this perspective, you know, there is a need for an app for simplifying things. What does this work? Where is the need for legislation on greenwashing at the same time for protecting investors and shareholders? Well, how about just like you know, label label reporting when you buy something on a product? You're usually, if you know you're buying food, it tells you how many calories the product has. And breaks down me. What have we had a separate little sustainable rating system that says, this is the CO2 impact of this product. Yes.

28:38 Already friend. France has been introduced such an Initiative for for particular, kind of food products. If I think that was to place a few years ago, I'm not sure how successfully days. But it seems that mandatory label of the carbon footprint of the product is on the way together with carbon tax. So, these are three nice, it is that we can see. But it may take place to our Trends by 2025, you know, carbon footprint, label not necessarily around the globe at least in Europe or in Canada, perhaps. I'm not sure about the us but also carbon tax. As, you know, Canada has started a few years ago before process. Yeah, the rest of the world is following right now, mean everybody's is creating carbon tax policies against the polluters.

29:35 Well, yeah, there's a lot movement there. There. This episode is sponsored by piece people advancing science to protect our environment and improve our health. Pace provides an unmatched depth, and breadth of testing and analytical capabilities, along with Professional Services for your in-house lab needs, they have the expertise capacity and delivery infrastructure to provide the certified results you require when and where you need them with over 40 years of innovation, more than 500 certifications. And accreditations pace is serving customers through over 100 lab and Service Center locations with mobile lab on site and emergency response service options available. Add paste, a honor, their commitments so you can order yours.

30:21 The next time. You are presented with environmental testing and analytical needs turn to Pace to learn more. Go to www.petland.com that's www.petland.com. But what are some of the challenges companies face with properly reporting their green Elves, so they don't end up greenwashing their results. What this do in order to avoid great ghosting. But your question, well, what are some of the challenges that they face when they're trying to, you know, properly report their green initiatives before you end up? You know, without actually greenwashing?

31:02 Yeah, first of all is lack of Education of their directors and supervisors, lack of Director of Education of themselves. Exit, e of the new standards that are out there. Norm's always issues are big supporters of greenwashing. How does that? How do you think technology factors into the greenwashing you know, challenges that companies face mean tracking you know data management reporting. I mean what where do you say that to be a big problem in the industry that that Monuments Men In the sustainability of sustainability data is a challenge.

31:48 Of course, we're a lot of software's out there, but still tracking and verifying data. It's not only tracking, but also very fact that it's a big challenge. I think this is the biggest challenge right now, but the companies are facing, it's not only tracking, but also verifying both. I have to say, and I believe they're going to be a lot of solutions towards this direction because they have to to write. I mean, doesn't seem like there's any one software program that meets everybody's expectations. There's no Silver Bullet out there. There's many, many ways to, to, and, to calculate, you know, and measure green, greenhouse gas.

32:29 And, you know, sustainability several Solutions. Not none of them is perfect. Yet similar Solutions. That's where we are right now. There's a progress towards this direction. Yeah, I think, I think for the next 10 years, 10, 15 years, this. This, this whole evolution of a software scenario for data management data analytics, you know, reporting is it's going to evolve, you know, quite a bit and there's be a lot of players. It's not just one. There's so many different Industries so many different use cases, you know, business practices that all need to be factored in and it's I think there's going to be so much of this. Bespoke type custom reporting scenarios that's not just a cookie cutters. Solution that's going to help everybody. Well, you know, let's has we wrap up here. Niko's, tell us talk a little bit about what's CSE doing to help companies with greenwashing concerns. Yeah, yeah thank you so much for asking this question and I think it's an important one.

33:33 So first of all we do a lot of research and indentify areas where a heavy greenwashing we educate marketing and communication professionals and sustainable professionals, how to avoid green bullshit. That's and again Our impact is huge there because we are leader in sustainability education. We advise corporations how to be accurate in their statements, inverse the nobility report and also in provide the number of tools, like the history assessment tool, where we can identify where they stand and stability, you know, and provide more accurate, that Traverse the nobility report. These are some of the ways that you know, says he contributes to the Avoidance of greenwashing so far but I believe honestly.

34:22 But the most important aspect so far as the education, right? It's like far V. You know, the most important impact that we have in the globe in the avoidance approve, option here. I think I think more awareness about that more shows or product you know top topics like this episodes were talking about greenwashing highlighting you know the topic how it works. What does it do? Affect investors House Effect companies you know, reputational risk, things like that. This is what's going to drive, you know, Industries and then I unfortunately you know there's going to be those situations where companies are going to be fine for, you know, inappropriately reporting. And you know, I'd hate to be in a position where I was a CEO of a company. Didn't know that.

35:06 I was misreporting, in fact, it actually was happening, I'd be pretty upset but that, you know, not knowing that and I think the challenge there is just not like you said, being educated enough to know that I To deal with. I need to dive into the details of bed to understand the whole process because it seems like, you know, Society is really pushed forward with this whole Mantra or mentality of sustainability. And and, you know, it's it's part of, you know, the DNA of the new investor, right? Yeah. That means they're going to be driving, you know. The younger generation is willing to put their money, they're willing to pay more money.

35:47 For a product, that's, it's truly green than a product. That's, you know, maybe less expensive, but not as green. Yeah. But the interesting thing is that the investors are the less educated on sustainability issues at the same time and this is a big gap that we need to you know find a way to fill in the Gap, right off. Educate of the appropriate education. So we are so proud that the last two or three years, there is more and more demand for board of directors, education or stability. And as you know, CSC is a leader involved and where many Boards of directors that they request from us to educate them about, you know, what is happening in this inability was important to their business, how they can't avoid greenwashing and they all give a lot of attention to that nobody wants risk to their business, just to let you know.

36:41 Yeah, I know. Hey no, I totally agree me that. Why do you want to have that kind of sitting out there? That's really You know, affecting the, the growth of your business because you've got this negative impact on, it's like having a bad social media, you know, post it goes out viral on, you know it's another one of those reputational challenges that companies at the face today. So this is all been great topics, great discussion today. Niko's, a really appreciate you coming on the show today, you know, I think we are going to try to get a green investment topic, inner, you know, episode here in the near Future. I think that'd be very interesting to see how the mindset of an investment manager is thinks about green Investments. I think that we're going to try to find somebody to come on the show about that.

37:27 So any listeners out there, know anybody there reach out to me. We're group 10 years because not. All right, Niko's, great to see you again Happy New Year to all our listeners. And they are not being Sustainable New Year. That's that's right. It's gonna be a great 2023. So good to see you and take care, talk to you soon. Thank you. I want to thank our guests. Niko's have Lana's for coming onto the show today. If you want to learn more about Niko's in his company, the center for sustainability and excellence and the services they offer, you can go to their website at www.csiro.au. Net dot org.

38:11 That's www.cpsc.gov net dot org. You can also connect with him via LinkedIn and I'll also put us contact information on my website to listen to Future environmental transformation podcast. You can check us out on Apple podcast Spotify, Google podcast and other podcast networks or better yet from my website at www.ge.com K great e.com and you can also follow me on Instagram over the environmental transformation podcast, Facebook page. If you enjoyed the podcast episode, don't forget to subscribe and tell your friends. I'd also like to hear your feedback from the ET Nation. About the episode and any other future podcast topics, you'd like me to cover Well for now, thanks for listening. And until next time, make a positive impact in someone's life today.