As the emphasis on sustainability and responsible business practices grows, small businesses must effectively communicate their sustainability and impact to stakeholders, including customers, investors, and regulators. However, exaggerating your business impacts or hiding negative impacts and only focusing on good news can result in fines and losing the trust of your customers and clients. Therefore, formulating a comprehensive sustainability strategy is crucial. Equally significant is the ability to communicate that strategy effectively.
This guide outlines the main principles and regulatory requirements for transparent and honest communication, emphasising the rules established by the UK Advertising Standards Association (ASA) and the EU Green Claims Directive. It also highlights how using Vested Impact’s assessment and data supports compliance and effective communication.
Key principles for communicating sustainability and impact
Simplicity: Use clear, straightforward language to describe your sustainability efforts. Avoid jargon and complex terminology that may confuse your audience.
Accuracy: Be truthful about your sustainability practices and impacts. Do not exaggerate or make unfounded claims about your environmental and social contributions. In accordance with the United Nations directive to ‘lead with science,’ these goals should be grounded in scientific rigour, with a dedication to evidence, transparency, and accessibility. If you cannot provide your own business data, providing data or research that is relevant, credible and trusted is crucial (Vested Impact can help with this).
Transparency: Provide detailed information about your sustainability initiatives, including methodologies, data sources, and the outcomes of your actions. Transparency builds trust and credibility. Transparency extends beyond the sharing of success stories. It means being open about challenges, areas needing improvement, and even failures. The more open a business is about its sustainability journey - the good and the bad - the more credibility it gains in the eyes of stakeholders.
Regulatory requirements and rules
There are now a number of regulations, policies and standards addressing what businesses can and can not say regarding their business's sustainability and social impact. You should always check your local rules around how to label, market and communicate your products and business to avoid any fines or misrepresentation. Below are a few of the key regulations and standards for UK and EU businesses.
UK Advertising Standards Association (ASA)
The UK ASA mandates that all marketing claims, including those related to sustainability, are truthful, honest, and substantiated. This means companies must follow the principles of:
•Accuracy: Ensure that all claims about environmental benefits are accurate and not misleading.
•Evidence: Provide robust and science-based evidence to support any sustainability claims. This includes citing sources and data that back up your statements.
•Specificity: Avoid vague claims such as "eco-friendly" or "green" without providing specific details about what makes your product or service sustainable.
EU Green Claims Directive
The EU Green Claims Directive targets greenwashing by requiring businesses to base their environmental claims on reliable and verifiable evidence. This regulation applies to all products and services marketed within the EU, regardless of the company's origin. Non-compliance can lead to fines, sanctions, and product recalls. The main requirements are as follows:
•Comprehensive Evidence: Claims must be backed by complete, science-based evidence that considers the product or service's entire lifecycle.
•Transparency: Businesses must disclose all relevant information about their environmental impacts, both positive and negative.
•Independence: The supporting evidence for claims must be independently verified to ensure objectivity.
Steps to communicate your sustainability and impact
Conduct a Science-Based Impact Assessment:
Use Vested Impact to assess and quantify your sustainability efforts. This assessment will provide a robust foundation for your communications, backed by independent science-based articles and data.
Disclose Actions and Policies:
Be transparent about your business activities, including any negative impacts and the steps you are taking to mitigate them. This is particularly important to comply with the EU CSRD, which requires businesses report disclosure of both positive and negative impacts.
Engage with Stakeholders:
A study by the MIT Sloan Management Review found that 88% of executives agreed that stakeholder engagement was important to their sustainability strategy. Meanwhile, according to a survey by PwC, 45% of investors want companies to identify the societal stakeholders they view as most important.
Create Clear and Honest Reports and Communications:
Develop reports that are easy to understand and that accurately reflect your sustainability practices. Include specific details and evidence to support your claims. Communicate your sustainability efforts through various channels, including your website, social media, and marketing materials. Ensure that the information is accessible and understandable to all stakeholders.
Conclusion
Effectively communicating your sustainability and impact is essential for building trust and credibility with stakeholders. By following the principles of simplicity, honesty, transparency, and responsibility, and adhering to regulatory requirements such as those set by the ASA and the EU Green Claims Directive, you can ensure your claims are reliable and credible. Using Vested Impact’s comprehensive and science-based assessment tools further strengthens your ability to provide accurate and transparent information, supporting your business growth and sustainability goals
How Vested Impact supports compliance and effective communication
Science-Based Assessments: Vested Impact offers comprehensive and reliable impact assessments that help meet the rigorous standards required by the ASA and EU Green Claims rules for requiring science-based data and evidence..
Transparent Reporting: The platform generates detailed reports that include both positive and negative impacts, aligned with global standards such as the UN SDGs and EU CSRD.
Independence: Vested Impact’s methodology is independent and not reliant on self-reported data, enhancing the credibility and objectivity of your sustainability claims by leveraging over 200 million data points from organisations like the United Nations, World Bank etc.
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This guide is supported by Mastercard Strive, a portfolio of philanthropic programs – supported by the Mastercard Center for Inclusive Growth – which supports small businesses around the world to thrive in the digital economy.
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