Greenwashing is under the spotlight - but is it relevant to property?
Despite the world looking more closely at greenwashing, it is tempting to think that property transactions are unlikely to be impacted greatly by the enquiries.
The focus is far more on consumables like food, drink, clothing and fossil fuels, rather than real estate. But that may not be wise. Better perhaps to look closely at what actions are being analysed and challenged and to consider how lessons learned in those industries might impact on property matters.
The property industry has the benefit of known standards with accessible criteria for compliance. They pave a way to make valid sustainability claims that other industries may not share. Homestar and Greenstar are good examples of tools that a builder, property developer, property investor or agent can reference and in doing so impart a sustainability message without insinuating more. Accuracy in any representation will remain paramount though. Care will still be needed that embellishments are not made using more general language, including the creation of an expectation that is not actually stated.
Encouraged by the increasing willingness of the public to consider climate in their choices, vendors and lessors may be keen to include reference to the sustainability elements of their property in their sales pitch. The benefits of innovative construction methods, renewable energy supply systems, and supply chains that contribute to the sustainability of a building all sound like good marketing material. It is these sorts of claims that will be watched not just by regulators and consumers but by action groups keeping an eye out for Earth.
Not only the regulatory watchdogs are watching
Existing consumer protection legislation remains relevant to claims associated with environmental aspirations and the Commerce Commission has released guidelines on making environmental claims.
The Advertising Standards Authority has specific requirements relating to environmental claims. Such claims must be accurate and must be “substantiated by evidence that reflects scientific and technological developments”. The ASA provides guidelines to assist in determining whether this standard has been reached. They include:
A lifecycle assessment of products
A broad interpretation of what is meant by the environment
A broad interpretation of the phrase “environmental claim”
The need for authenticity of language e.g. “environmentally friendlier” must show
meaningful improvement on prior products or those of competitors.
Consumer NZ has greenwashing in its sights and is actively investigating how extensive it is in New Zealand. It currently invites examples of greenwashing on its website. Although current concerns are not focussed on the property industry, it is calling for both an independent investigation into the extent of greenwashing in this country and for regulations to specifically address greenwashing.
The Real Estate Authority provides an easy avenue for public complaint regarding the actions of real estate agents. Given the obligation on agents to advise a potential purchaser of property defects, the requirement for vendors to be accurate with their representations and changing views in acceptable sustainability standards, there are increasing opportunities for agents to participate in greenwashing whether consciously or not. As tenants seek premises that match their own sustainability objectives, and as purchasers look to leave a lesser mark on the land, expectations of agents to correctly describe the environmental impacts of buildings and land use may well develop.
However, environmental claims receive particular attention from others too. This is because greenwashing does more than simply impact the consumer who is immediately affected. It has a broader impact. Greenwashing enables polluters to be unaccountable. It undermines the confidence that the public has in environmental claims and environmental information. That in turn has the impact of slowing climate or other sustainability action – by both polluters and by the public. For these reasons a range of action groups keep an eye out for greenwashing - both in New Zealand and internationally.
Learn the language
Planet Tracker is a not-for-profit initiative out of the UK. It has bold ambitions to change financial activities that impact Earth. It does this both by analysing actual activities and impacts and through proactive market engagement. Earlier this year Planet Tracker produced a report detailing the evolution of greenwashing. Called “The Greenwashing Hydra”, it investigates the nuanced meaning of the term.
We have long known that silence can be a misrepresentation but greenwashing it is said comes in many forms. Thinking of it only in terms of actual representations about environmental matters is too simplistic to fully catch what is meant by the phrase. This is the language used by Planet Tracker to illustrate different ways greenwashing is evidenced.
Greenhushing “under-reporting or hiding [ ] sustainability credentials in order to evade investor scrutiny”
Greenrinsing “when a company regularly changes its ESG targets before they are achieved”
Greenlabelling “where marketers call something green or sustainable, but a closer examination reveals that their words are misleading”
Greenshifting “when companies imply that the consumer is at fault and shift the blame onto them”
Greenlighting when companies ”spotlight a particularly green feature of its operations or products, however small, in order to draw attention away from environmentally damaging activities being conducted elsewhere”
Greencrowding ”groups including governments and alliances of environmental issues in which corporates join forces to effect change” But change is slow – probably as slow as the worst in the group.
This wide range of actions described as greenwashing illustrates the need to think carefully when making sustainability claims not just through words, but also through actions and priorities.
The descriptions can apply to the property industry as much as any other - whether relating to the sales or leases of properties, or to how a property company represents itself and its means of conduct.
Consider this advice for your property clients both those making environmental claims and those staying mum on their environmental scorecard:
Be precise in marketing material, don’t use terms that invite clarification like “sustainable”, “energy efficient” or “carbon neutral”
Create a true impression, whether through words or images
Staying mum might be a deliberate choice but do make sure it is a choice
Look at the lifecycle of a product or system (rather than part way up the pipe) before making product claims
Keep data to support claims
Be upfront about off-setting and use it as a pathway to different behaviour rather than a
solution in itself.
Be upfront about progress with sustainability goals but careful to ensure they are accurately expressed
Commerce Commission New Zealand. (2020, July). Environmental Claims Guidelines a guide for traders.
Willis, J. (2023). The Greenwashing Hydra. Planet Tracker.
A version of this article first appeared in The Property Lawyer in November 2023 and is published with the consent of the NZ Law Society, Property Law Section.
© Debra Dorrington 2024.