TANGLED IN GREEN TAPE? Is it time to revision your Impact Company as a Think Tank?

 If you are a B-Corp, an Impact Investor or a Purpose-Driven company with a specifically environmental or ‘sustainable’ focus, I’ll be honest: I do not envy you right now. Despite our strong interest in the ethical, impact and also SRI sectors, SLB isn’t a B-Corp, far from it. But even from the outside looking in, I feel your pain, and I even feel angry on your behalf.

So-called Greenwashing laws are not new in the UK. And those finalised in the EU on September 27 may only be the semi-final clampdown: most should have known about this months ago. And all of these should have been a good thing, on paper. Who doesn’t want to see misleading ‘green’ claims and general ‘greenwashing’ shut down?

But the cost and complexity of proving to an extremely high (one might say pedantic) degree of accuracy any given environmental claim, coupled with punitive penalties, and ambiguous laws that threaten an unprepared SME could, I fear, be too burdensome and risky for most to bear.

In England the CMA’s Green Claims Code has already been long in force, but many are still twitchy, at best, from the enforcement on September 27th of the EU ‘Greenwashing’ law (known as the ECGT (Empowering Consumers Directive)). This also comes alongside a frankly overwhelming overhaul of the B-Corp system instigated by B-Lab to align with these laws, whereby B-Corps new accreditation process is no longer a simple scoring system. Not only does progress have to be shown on a more continuous basis (making the work feel almost full-time) but a company now must cover multiple areas. So if you prided yourself on workforce wellbeing, but your carbon footprint was high or your Supply Chain difficult to trace, you no longer qualify. (And this system is retroactive: the former B-Corp label will no longer be legally valid without a full audit and upgrade to the new standards and failure to do so could see alarming penalties…is this why we see new B-Corp adverts?)

For many, if not most, the weight of current legislation, the ever-growing demands for proof and data, the ongoing assessments, the ambiguity of certain aspects of the laws, the accuracy demanded, and the potentially punitive financial penalties that can be triggered by a misstep may be burdens too heavy and risky  to bear. 

The New Greenhushing: the End of Purpose-Driven Business?

No wonder we are already seeing a new a strain of ‘greenhushing’ emerge. The term was initially coined in the States when toxic culture wars turned ESG – still a harmless appellation in the UK and Europe - into a heavy politicised and polarised ideological issue. Companies that had worked hard on sustainability and other ethical credentials became fearful of ‘looking political’ and began either hiding away their ESG labels.

Now companies are greenhushing for a very different reason: it simply feels too risky to constantly monitor whether any given ‘green claim’ has enough scientific data behind it, or is accurate enough, to avoid a heavy legal and financial penalty.

The Greenwashing laws at first glance may seem transparent - but there is enough ambiguity to put the fear of  God (or Gaia) into anyone. For example, the concept that all ‘green’ claims must be proven and provable may not, on the face of it, sound especially alarming or even complex: the laws are clearly designed to prevent cynical actors and most well-meaning ‘green’ companies and B-Corps take enormous pride in authenticity. But the laws are highly ambiguous. In addition, very many well-meaning B Corps have relied on ‘gold-standard’ carbon offsets, yet the new EU laws have placed a complete ban on any ‘green’ claims based on carbon offsetting at the product level at all. And the problems don’t stop at packaging but extend to any material, including website copy and blogs, and not only where these discuss specific product claims  (although I would argue that a blog is absolutely not the place to have been company horn-tooting in the first place). They target, too, any visual material that gives the general impression of ‘being good for the environment’. So even if that company really is sustainable, any ‘green’ imagery used must now be accompanied by  highly specific and rigorously worded captions.

Take the idea of a company that produces a product with ingredients extracted from wildflowers, and uses in its Instagram hazy photos of a wildflower meadow. They may even have planted the wildflower meadow themselves – in the heyday of Purpose-Driven business, this would have been seen as a positive endeavour. But now, this photograph, to be legal, would be expected to include a prominent caption along the lines of ‘This wildflower garden was planted by us at our Headquarters, but is not the wildflower garden we use for our ingredients. In addition other aspects of our manufacturing process are only 40% Responsibly Sourced and have X carbon impacts’ (this is just an invented example – in reality the Disclaimers may even be longer, and will need checking by a legal team). And this caption will inevitably be negative because no company can be 100% green or sustainable since the only company with zero environmental impacts is one that doesn’t exist.

If you feel depressed by this, or even punched in the gut, I don’t blame you. Disclaimers like this are just too legally risky for any company small enough not to have specialised legal support. But even if they weren’t, who in their right mind would want to continue in this vein? Not least, those wildflower photos are suddenly incredibly depressing, which is hardly a great marketing trope (unless you are Patagonia: see below). Now, sorry for the lapse in professionalism, but this really harshes one’s buzz. Why even bother continuing down this route when most of the ‘marketing’ benefits appear to be stripped away? Half the point of such imagery was to create a feel-good feeling: this is very much a feel-bad vibe. If the laws were intended to put an end to greenwashing, wont this instead likely put an end to green, sustainable, ethical, purpose-driven or impact businesses altogether?

Even Patagonia, the market leader, is now producing material focused on what it isn’t doing perfectly rather than boasting about what it is. This is a radical shift, and if Patagonia must to do this, we see the scale of the problem. What’s more, Patagonia are probably the one company on the planet that could make such disclaimers ‘look cool’. They are already well-known for ironic back-to-front marketing style, such as the famous (or infamous) ‘Don’t Buy this Jacket’ Ad. But for every other company that follows, it would simply feel depressing bleak (or copied from Patagonia!).

In addition, ‘doing’ environmental sustainability properly is expensive and time-consuming, and if a brand only ever took off because of this angle, it is simply unfair to suggest that companies throwing in the towel were cynical in the first place.  And whilst eventually selling the business was likely not the central reason for starting a so-called ‘green enterprise’, any founders who had hoped one day to sell risk finding themselves with the ethical equivalent of a stranded asset – unless perhaps they can get a market leader to buy them out. Most investors were already leery of B-Corp due to its expense: chances are now they may not touch openly green companies with a upcycled bargepole.

Now, when a company that has greatly contributed to the environment is as stranded an asset as a cigarette producer, tragedy  - or perhaps travesty – is the only word I can think to describe it.

Social Claims v Environmental Claims

While the EU law does, in fact, also cover the social sides of ethics, such as issues around slave labour,  working conditions within supply chains, gender equality, fair pay and so forth, such claims may be somewhat easier to correct without fear of an inducing a litigation nightmare. For example, Tony’s Chocolonely (a consumer chocolate brand whose stated mission is to wipe out the use of forced labour in cocoa production) decided to change its strapline from ‘100% Slave Free’ to, rather, imply an ongoing commitment to provably check in about slave labour. It is virtually impossible to prove the perfection of a supply chain in an industry as rife with problems as the cocoa industry: but it's very possibly to report check-ins.

EU Laws state for example that “Information provided by traders on the social characteristics of a product throughout its value chain can relate, for example, to the quality and fairness of working conditions of the workforce involved, such as adequate wages, social protection, the safety of the work environment and social dialogue. Such information can also relate to respect for human rights, to equal treatment and opportunities for all, including gender equality, inclusion and diversity, to contributions to social initiatives or to ethical commitments, such as animal welfare. The environmental and social characteristics of a product can be understood in a broad sense, encompassing the environmental and social aspects, impact and performance of a product.”

Where does that leave vaguely ‘social feeling’ or ‘diversity-promoting’ ads, such as Dove’s campaigns? Despite the wording the laws are rather less clear on non-environmental social sustainability claims.

Was the ‘Trend’ over Anyway? Customers and Clients Leading the Way: The Rise of Ethical Demands (and Subsequent Cynicism)

But perhaps the writing was already on the wall for overtly ‘green’ business? These laws do appear to coincide with a number of other shifts and factors that may suggest the ‘heyday’ of the ‘green mainstream’  is over (or rather, the more environmentalism actually becomes mainstream, in terms of legislation and compliance, the less it may appear mainstream in advertising and branding).

It has, over the last few years, become rather fashionable to ask whether the Impact and Purpose-Driven spaces were just a ‘marketing’ trend anyway, or to state that the death of the ‘virtue economy’ is nigh. I have always refuted this, not least because so-called ethical business first began to bloom in the late 1970s with the likes of The Body Shop, peaked at the millennium, with the likes of Innocent, and by 2026 had become almost completely mainstream. In marketing terms, a 45 year lifespan can hardly be construed as a ‘trend’.

More importantly (and depressingly), not a single one of the issues raised by ‘green’ and other ethical or impact companies has so far been solved: we are still very far from environmental targets. And there remain a large number of customers, consumers and clients who still care deeply about these issues, if only to ensure their own Supply Chain isn’t contaminated. In a sense, almost all companies today could be seen as ‘purpose-driven’ because consumers, concerned with their own ethics, or clients, concerned with their own Supply Chains, have increasingly demanded that companies contribute to society as well as their own bottom lines.

Yet it’s certainly now true that, precisely because of this demand, ‘greenwashing’ has become rife, and that ‘green-feeling’ or ‘social-feeling’ forms of advertising, branding and marketing have become so prevalent that we have already reached, as I like to term it, ‘peak-cynicism’. Greenwash, and also more broadly what we might call ‘ethics-wash’ or ‘good-wash’, are no longer a minority sport. Look at terrestrial TV: every other ad, it seems, positions companies as ‘good’, ethical, ‘on the side of the people’, with alternately comedic or sarcastic attacks on ‘big banks’ and ‘greedy fat cats’, or else utilising grainy footage, sentimental soundtracks and hazy retro photography to suggest nostalgia, a sense of community, or a sense of a social realism. Indeed the latter became so prevalent that it even earned its own name: ‘sadvertising’.

Regardless of whether these claims pass the laws or not, they have begun to feel hackneyed. Customers have, with good reason, become increasingly cynical, and the tide was already turning towards an ever growing demand for truth and proof, evidence and data. The current cry is  ‘show us the receipts!’ (or, as I call it in my forthcoming book, ‘Prove that you Care!) In addition, legislative pressure has been growing for a long time, including the first ever case in the EU of a company being taken to court for a false claim. In the finance industry, Sustainable or SRI Investments and ESG Funds are now subject to proper product labelling (similar to food product labelling), and blockchain is also already being widely deployed to prove the credibility of Supply Chains.

We have of course also witnessed the shift from ‘Ethical’ to ‘Impact’, watching as the desire to ‘not do harm’ (for example removing Sin Stocks from portfolios, or becoming carbon neutral) has shifted to ‘proactively doing good’ (for example being carbon positive). In the language of Sustainable Finance frameworks, this maps on to a shift from S.F. 2.0 to SF 3.0 and indeed the concept of Integrated Value Creation (the subject of a forthcoming post) is increasingly mainstream, especially in the Eurozone, perhaps in part because of an historical quirk whereby leading European companies are more likely to be privately owned rather than listed and so are less beholden to a quarterly shareholder structure which in turn allows longer term, more sustainable approaches to business growth. This is a far cry from claims that the ‘Virtue Economy’ was a passing fad: when the corporate finance world gets on board, we are no longer talking about a trend but a necessity.

On the other hand, the sheer weight of legislative burden imposed by new laws will almost certainly lead to the demise of large swathes of the ‘green’, impact, or ethical sectors. Certainly the big players will and must remain in this field – there is just too much capital invested. And any company that is both dedicated enough, and, crucially, large enough to have an in-house Legal team, may continue. Too, ‘green’ and ethical practices behind the scenes will continue, if only out of compliance to legislation, and in some cases due to genuine ethics on the part of founders or leaders. But too many smaller companies – and likely many who were considering entering these spaces – may feel too alarmed to continue and I don’t blame them. When every vaguely green image must now be slapped with downbeat factual captions that can so easily be misworded, and when even the use of an image of a leaf has become problematic, you have three options: close the business, greenhush, or pivot. If you greenhush when the core of your brand is green, you no longer have a brand. And given most environmental-based companies are in it precisely because they care about the environment, few are likely to want to pivot. We must accept that many will simply need to exit the space altogether.

The Good News: Turning a Legislative Nightmare into an IP & Credibility Boon

If backing up ethical or prosocial claims was already becoming increasingly important from a customer perspective – and especially so for discerning, ethically-driven yet ever more cynical customers - it will now be imperative as a legislative demand and a critical Compliance and Business Risk. This in fact is no longer (only) a marketing issue and the ‘big guns’/market leaders like Patagonia view it as such. In fact any company whose Sustainability Officer still reports to its Head of Marketing may need to think again: S.O.s should now be located within Compliance and Risk teams. So for those who are large enough and therefore legally and financially robust enough, as well as dedicated and brave enough to ‘stay on those roads’, it will of course now be imperative to be 100% accurate in any claims you make.

Does this mean that unless you are already a market leader, its time to bow out? I’d argue – and this is purely my opinion – that if you are very specifically in the environmental space, and are not large enough to have dedicated specialist legal input as well as environmental expertise, your life may become difficult: whether you want to continue is an important decision. Also consider what buyers or investors may feel if you were looking in those directions. Is your openly green angle now a liability rather than a selling point?

Too, if you are deciding whether to continue with B-Corp under the new rules, you will either need to face the facts that it is simply too burdensome, or else find ways to embrace the level of rigour and continuous proof and engagement that is going to be required. Now is a good time to think about whether B-Corp is really necessary for you. Did your customers ever know what it meant anyway? Could you achieve the same goals quietly and without the time and cost – if you were largely doing it for pure ethical reasons? I am not trying to turn anybody away from B-Corp status but those that continue with it under the new regime will need to embrace it almost as a way of life, not a once every few years accreditation exercise.

For those who can – and do – continue with renewed dedication, there is an opportunity here. Ultimately we will likely find that the ethical, green and impact spaces ‘as a mainstream trend’ subside as a wave of ‘greenhushing’ takes hold, and all but the most dedicated (or largest, or well-equipped) will survive. Those that do remain will have had to embrace the ‘burden of proof’ behind their purpose (or impact mission) with significantly more rigour and resources than ever before. And in order to do so, they will also need to embrace, not fight against, new and significantly higher standards, revisioning themselves not just as companies but perhaps even as 'Think Tanks'. Crucially, they will also need to find ways to show their dedication that avoid becoming entangled in punitive ‘Green Tape’, and this may even mean eschewing direct claims at all but instead aligning with causes from a different perspective – for example as publisher-collaborator on independent, objective material. If customers and clients alike have reached ‘peak cynicism’ when it comes to both green claims and pseudo-Thought Leadership, Greenwashing laws may certainly be a form of ‘tough love’.

Note/Disclaimer: I am a Thought Leadership expert with a strong interest in this area, not a legal expert on Greenwashing laws. Please seek in-depth formal advice from your Legal Team / Sustainability Officer on the specifics of ethical and especially ‘green’ claims.