Sustainability is a hot topic for product manufacturers and institutional investors are calling on companies to embrace sustainability standards, but it could be a mistake to be overly promotional about all the new disclosures: a new survey suggests that the majority of Canadian consumers do not believe most green claims that brands make.
At the institutional level last month, the CEOs of 11 of Canada’s biggest pension investment managers called on the companies they invest in to embrace the new International Sustainability Standards Board (ISSB) disclosure framework, launched in June.
The list of signatories to the joint statement is notable, including the Alberta Investment Management Corporation (AIMCo), British Columbia Investment Management Corporation (BCI), Caisse de dépôt et placement du Québec, CPP Investments, Healthcare of Ontario Pension Plan (HOOPP), Investment Management Corporation of Ontario, OMERS, Ontario Teachers' Pension Plan, OP Trust, PSP Investments and University Pension Plan. The plans together manage more than $2-trillion.
“The ISSB, which released the new standards on June 26, said this new framework will help to improve trust and confidence in company disclosures about sustainability,” they write.
If businesses were then tempted to develop marketing around the disclosures they make, they should be aware that outside of investor circles, making sustainability claims can lead to some reputational risk.
In its latest report, Deloitte Canada writes that there is a substantial disconnect between how brands and consumers regard sustainability claims and products. While 71 per cent of the 311 Canadian business leaders surveyed think the public has significant or moderate trust in the authenticity of their sustainability claims, in reality, the survey found 57 per cent of the 1,008 Canadian consumers do not believe most green claims that brands make.
“The report shows 41 per cent of businesses underestimate the risks of greenwashing accusations if they pursue sustainability goals. Business leaders surveyed seemed largely unconcerned or unaware of how consumers perceive their sustainability product or the potential impacts that accusations of greenwashing could have on their brand,” they write in the report entitled Creating value from sustainable products: How business purpose and brand trust can make the difference.
The report further found that 46 per cent were unwilling to pay extra for sustainable products, saying it is hard to identify those that are genuinely sustainable.
“Purpose-led companies that make it easier for consumers – by using simple, informative language and creating seamless experiences – to contribute to sustainability efforts through their purchases are those that will overcome cynicism, create loyalty and drive sales,” the report states.
