Can You Be Sure You Aren’t Greenwashing… or Soc Washing?

With several new pieces of legislation released throughout the UK and EU in 2024 we take a look back at the information you need to know to make sure you stay on the right side of the line when it comes to your sustainability disclosures.

Sustainability sells, and unfortunately that means that some unscrupulous companies will use it as a marketing device without actually living up to the claims they make.

In the field of environmental sustainability, this is widely known as “greenwashing”.

But when it comes to the social “S” in ESG, the less-familiar term “soc washing” is increasingly used to describe the practice of making exaggerated, misleading, or downright false claims about social impact.

Being caught deliberately or unwittingly green – or soc – washing can be damaging to a company’s reputation, so it’s vital to understand the rules and best practices around publicising your sustainability credentials and commitments.

Indeed, so harmful can such an accusation be, that a growing number of companies are “green hushing”: that is, staying quiet about the very real work that they do for fear of making a mistake and suffering bad press.

With more than half of UK respondents to a 2023 KPMG survey saying that they would consider boycotting a brand over misleading claims, the stakes are high.

So, this blog aims to set out the latest do’s and don’ts around sustainability claims as we head in 2025.

New Disclosure Requirements for 2024

2024 has seen several important legal changes around what certain businesses have to make public.

For example, the Financial Conduct Authority’s (FCA) Sustainability Disclosure Requirements (SDRs). These apply to FCA-authorised firms, UK asset managers, and certain distributors of investment products. At the time of writing, they are part-way through implementation.

As well as introducing a labelling system for approved investment products, the SDRs oblige affected companies to adhere to this “anti-greenwashing rule”:

“From 31 May 2024, firms need to ensure their sustainability references are fair, clear and not misleading, and proportionate to the sustainability profile of the product and service. However, firms subject to the naming and marketing rules for asset managers aren’t required to meet those additional requirements until 2 December 2024.”

A second major innovation is the European Union’s Corporate Sustainability Due Diligence Directive (better known as CS3D), which took effect in July 2024:

This affects:

• EU companies with more than 1,000 employees a net worldwide turnover of more than €450 million
• Non-EU companies with a net worldwide turnover of more than €450 million in the EU
• Non-EU and EU franchises with a net global turnover of more than €80 million and more than €22.5 million in royalties in the EU

Affected companies (implementation is phased to 2026) must conduct due diligence across their entire “chains of activities” – upstream and downstream – to ensure compliance with human rights and sustainability standards, and communicate publicly about that work.

In addition, companies must adopt, implement and annually update climate change mitigation transition plans, geared towards meeting the terms of the Paris Agreement.

So not only is it becoming more difficult to green- or soc wash – but hushing is becoming less of an option as well, as disclosure requirements step up.

With the EU working on a Green Claims Directive, the net will get even tighter in the future.

The Green Claims Code

All very well and good if you’re in the financial sector or you’re a multinational. But what about everyone else?

Back in 2021, the CMA (Competition and Markets Authority) surveyed around 500 global websites and found that 40% made ‘green claims’ that were potentially misleading. The result was the Green Claims Code.

This provides guidance on how businesses can ensure the way they talk about their environmental impact is in line with consumer law.

The Code advises that all claims must:

• Be truthful and accurate
• Be clear and unambiguous
• Not omit or hide important information
• Only make fair and meaningful comparisons
• Consider the full life cycle of the product
• Be substantiated

Any “green claim” that falls short of these conditions should be considered greenwashing.

So what’s a “green claim”?

A “green claim” is any statement to the effect that a product or service is beneficial to the environment or less harmful than alternatives.

For each green claim you find, the CMA has helpfully produced a 13-point checklist to help you determine whether it’s misleading or not:

1. Is the claim accurate and clear for all to understand?
2. Is there up-to-date, credible evidence to show the green claim is true?
3. Does the claim clearly tell the whole story of the product or service? If it relates to just one part, does it do so without misleading people about overall impact?
4. Does the claim contain partially correct or incorrect information, or information that’s only true under certain conditions?
5. Do general claims to be “eco-friendly”, “green”, “sustainable” etc. reflect the whole life cycle of the brand, product, business or service, and is it justified by evidence?
6. Are conditions or caveats that relate to the claim set out in a way everyone can understand?
7. Does the claim mislead customers or other suppliers?
8. Does the claim exaggerate any positive environmental impact, or contain anything untrue – whether clearly stated or implied?
9. Is durability or disposability information labelled or explained clearly?
10. Does the claim omit or hide information about the environmental impact that customers would need to make informed choices?
11. If information is not provided that forms part of the claim, is it easily accessible elsewhere e.g. via QR code or website?
12. Does the claim present features or benefits that are necessary standard features or legal requirements of that product or service type as environmental benefits?
13. If a comparison is used, is the basis of comparison fair, accurate, and clear for all to understand?

If you can answer “yes” to all of these questions, then the green claim should be compliant with the code.

If you can’t answer yes, you should:

• Stop making the misleading claim and withdraw any materials that employ it.
• Amend the claim to bring it into line.
• Ensure that you have sufficient evidence to substantiate what you are claiming.
• Make sure that information is provided to consumers so that they can make informed choices.

The CMA recommends speaking to your local Trading Standards Service if in any doubt.

While the Green Claims Code is focused on consumer law, it also applies to B2B marketing, where misleading advertising and comparisons are expressly forbidden.

The CMA’s guidance says:

“The CMA urges all businesses to act fairly in their transactions with other businesses, particularly where small businesses are concerned. The examples included in the guidance also generally apply where the claims are made by one business in their advertising to another. By applying the same high standards in both business-to-business and business-to-consumer engagement, businesses can support trust in the green economy and mitigate the risk of harm to consumers.”

But What About Soc Washing?

With so much more attention paid to environmental sustainability than other forms, businesses are far more wary than they once were about greenwashing.

But the number of “brand activism fails” seen around companies making claims about or allusions to their social commitments that have then backfired suggests that we still have a long way to go to reach a similar state with soc washing.

Pepsi’s 2017 “Black Lives Matter” ad with Kendall Jenner was a particular lowlight, but every Pride Month or International Women’s Day sees companies around the world attempting to signal their progressive credentials – only to have their actual behaviour in practice quickly exposed.

There are more insidious cases around modern slavery and human rights abuses, whether committed directly by companies or by their suppliers.

Disclosure requirements have a part to play. If companies are required, for example, to publish gender pay gap data, they will be incentivised to reduce it. If companies face boycotts and disinvestment because of who they do business with, they will work to clean up their supply chains.

Social value can also play a part in tightening up the “S” pillar of ESG, as we’ve argued before.

The reporting requirements put in place by PPN06/20 and carried forward by PPN 002 and PPN 026 for central government procurement impose a rigour and a focus on delivery that make it hard for businesses to avoid being held responsible for failing to live up to their promises.

And of course, most of the steps outlined in the CMA checklist above can be applied to social claims as well as environmental ones – with consumer law offering some kinds of redress.

The fight against soc washing is at an earlier stage than the parallel struggle with greenwashing. But there’s a clear public demand to stop this kind of behaviour, and a powerful set of templates and tools available from the “E” pillar’s example.