As Conor Chell at KPMG outlines, regulators are catching up to this superficial approach to ESG compliance. “Greenwashing,” where environmental claims don’t match the reality, is on the radar of the Competition Bureau. Companies that make exaggerated or false claims about their environmental bona fides are being notified that they may be fined.
While there may not be an equivalent regulatory crackdown on false claims about social initiatives, businesses that claimed they were committed to improving their diversity during the Black Lives Matter protests in 2020 are also being pushed to prove their ongoing commitment. Companies that said they were committed to engaging with underrepresented communities but did nothing will see the effects on their brand in the court of public opinion.
Increased scrutiny should be a welcome development for companies genuinely committed to change. Understanding how environmental changes and the makeup of their workforce affect their businesses will help them operate more profitably.
As Chell notes, “It is no longer optional for companies to not take accountability for or provide further transparency into their public ESG commitments. Companies that fail to adapt will risk legal repercussions and lose the trust of the public and the investment community.”
Conor Chell will be the keynote speaker at the ESG Summit in Toronto on October 30. Visit ESG-summit.ca to register.