As we embark on our 13th year of providing clear and credible standards for the social enterprise sector, we remain committed to protecting the integrity of genuine social enterprises by supporting them to prove their credentials and lead the world in ethical and sustainable business practice.
We have seen many changes in the market over the 12 years since we launched the Social Enterprise Mark, and in recent years there has been a growing proliferation in marketing claims around ‘purpose’, ‘good business’ and ‘sustainability’. This has led to a more crowded marketplace for those businesses seeking to stand out based on their social enterprise credentials.
We have seen widespread ‘greenwashing’ – the practice of using misleading PR and marketing claims to appeal to ethical and environmentally-conscious consumers. Sadly, this is now commonplace in consumer markets and many large corporates often focus on specific areas of how their product/service is ‘environmentally-friendly’, ‘green’ or ‘sustainable’, while ignoring the other areas where they have a significant negative environmental impact.
With increasing numbers of consumers looking to spend their money with ethical and sustainable businesses, it is vital they are able to cut through this greenwash to identify those businesses that are genuinely focused on creating social or environmental benefits.
For example, in 2019 Shell announced a $300 million investment in ‘natural ecosystems’ as part of a strategy to take action against climate change. However, the Intergovernmental Panel on Climate Change (IPCC) has pointed out that such actions do not mitigate or offset the continued release of greenhouse gases that result from Shell’s extraction and burning of fossil fuels.
With increasing numbers of consumers looking to spend their money with ethical and sustainable businesses, it is vital that they are able to cut through this greenwash to identify those businesses that are genuinely focused on creating social or environmental benefits.
Following research by the Competitions and Markets Authority (CMA) in 2021, which showed a staggering 40% of green claims made online could be misleading consumers, new regulatory guidance has recently come into force in the UK, which protects consumers from misleading claims, and also protects businesses from unfair competition. The Green Claims Code, which sets out six key principles to help businesses ensure their green claims are genuine and not misleading, aims to creates a level playing field for those businesses whose products genuinely represent a better choice for the environment and who can make truthful environmental claims.
Our friend Sian Conway-Wood, Founder of the #EthicalHour online community, recently ran a webinar, which gave a really useful overview of the Green Claims Code and provided guidance to support businesses to get ready for the new guidance and use their sustainability as a competitive advantage whilst remaining compliant. We would recommend getting in touch with Sian if you would like support with turning your sustainability into a selling point.
Interestingly, the CMA guidance states that claims must not focus on a minor part of what the business does if the core business produces significant negative effects… I refer you back to the Shell example given above! Dependent on the power, resources and willingness of the CMA to act, hopefully the subsequent investigations (and probable high fines for those found to be flouting the regulations) will lead to a reduction in greenwashing. This would enable more social enterprises to truly differentiate themselves and stand out as the ethical and sustainable option.
One of the central principles of the Green Claims Code is that claims are substantiated by credible evidence. Part of this is being able to demonstrate that the claim has been subject to independent scrutiny/verification.
So, how can businesses that are genuinely driven by a motivation to create value for people and planet effectively back up their claims? One way to gain independent verification is through gaining external accreditation/certification.
In its guidance, the CMA states, “Symbols, trust or quality marks awarded by independent third parties on the basis of a formal assessment against lawful and objective criteria are less likely to be misleading. For example, where these endorsements are based on clear, publicly available criteria, or internationally accepted methodologies.”
Additionally, from a consumer point of view, they are more likely to trust claims that have been independently verified. Research commissioned by Compare Ethics in 2020 showed 83% of consumers would be more likely to trust a product’s sustainability claim if it had been verified by a third party.
Our own social enterprise accreditations provide independent assurance that an organisation has met a set of robust sector-agreed criteria, which are fully transparent and made public for anyone to view, which should create more customer/consumer trust in the claims made around being a social enterprise.
As a sector we need to be the leaders in openness and transparency, and we can’t expect people to take our claims for granted, especially in this world of increasing greenwash and hype around ‘purpose’ and ethics.
As social enterprise is still not a distinct legal form in most countries, in effect any business can claim to be one. By providing a clear and credible set of standards against which to assess social enterprises, we can hold these businesses to account for their claims and in doing so support them to prove their credentials and stand out from the crowd as in independently verified social enterprise, which is creating positive impacts for people and planet.
As one of our Social Enterprise Mark holders recently stated, “We can now proudly show that we have been assessed against a recognised and reputable framework, and that the work we do as a social enterprise has been validated by experts in the field… The accreditation process is very rewarding and has certainly been hugely beneficial to our organisation.”
As a sector we need to be the leaders in openness and transparency, and we can’t expect people to take our claims for granted, especially in this world of increasing greenwash and hype around ‘purpose’ and ethics. If we are not careful, we will be left behind as others with louder voices and more power eclipse our voices through these means.
Meaningful accreditation and showing our distinctiveness is an important part of getting our house in order to tackle the world’s challenges as we grow in maturity and stature.
If you are interested in finding out more about how accreditation can benefit your social enterprise, please complete our short online form and a member of the team will be in touch.