Why Sustainability and Transparency Go Hand in Hand

When Procter & Gamble, one of the world’s largest consumer goods companies, announced in 2019 that it would not meet a commitment to zero deforestation by the end of the decade, the news met mounting criticism and demands for action from investors and sustainability advocates. How the company responded is worth a deeper look.

It’s easy to see why stakeholders were upset. Even as organizations are increasingly making firm commitments to sustainability, many are struggling to deliver on them — and employees are noticing. WE’s latest Brands in Motion study, “Winning the Battle Against Green Fatigue,” found optimism lacking among employees. Roughly 45% suspect the companies they work for are involved in some level of greenwashing, defined as the act or practice of making a product, policy or activity seem more environmentally friendly or less environmentally damaging than it really is.

How can companies manage the consequences of falling short of their ambitious, long-term emission targets? It may seem counterintuitive, but the answer is to make their sustainability efforts more transparent.

Let’s go back to Procter & Gamble. Instead of shirking its responsibilities and choosing to stay mum on the issue, the company tackled the challenge head on. Its sustainability officer publicly acknowledged the shortcoming and released new plans to get on track with its commitments. Procter & Gamble’s quick and clear response rebuilt credibility among its employees and stakeholders.

Transparency Manages Expectations, Initiates Dialogue … and Mitigates “Greenhushing”

When progress reports are shared on a regular basis, stakeholders — especially employees —feel trusted and form a deeper connection to their organizations. They feel more aligned with the bigger picture and share a greater sense of purpose.

Well-informed employees tend to be more understanding and forgiving as well. For example, our research shows that 88% of employees who know about their companies’ timebound sustainability initiatives say their employers will meet some or all of those commitments, and 75% say they would at least understand if their employers missed a target.

Committing to transparency also means developing clear and measurable targets, which are priorities in today’s climate as regulators, such as the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission, are increasingly probing companies for greenwashing and taking action.

But even for companies that haven’t yet established an official policy, framework or reporting structure, there is an opportunity to update internal and external stakeholders on environmental, social and governance (ESG) progress. Most companies have governance policies and social initiatives in place. For example, remuneration and diversity policies as well as employee safety policies satisfy ESG criteria and align with the United Nations Sustainable Development Goals.

Proactively communicating on varied owned channels can create a platform to be used as a catalyst for future ESG policy creation and reporting. Inclusion will also initiate a dialogue with stakeholders, providing valuable insight into what they want.

As a business leader, even as it may be tempting to go radio silent on your company’s climate goals to avoid scrutiny — a practice known as “greenhushing” — don’t. Being opaque about your goals engenders mistrust with your stakeholders and ultimately sets your sustainability journey back.

Plans to Reset and Correct Are More Important Than Missed Targets

Be open about where you fell short — missed targets, failed initiatives, flawed calculations — and your stakeholders will give you the benefit of the doubt.

Besides clarity and honesty, employees want to see how you plan to correct course. When asked what they would want to see from brands and businesses if they miss their sustainability targets, the top two answers are “provide a plan to get back on track” and “communicate transparently about where the company fell short.”

Companies have a great opportunity to be vulnerable during these setbacks and use this open dialogue as a springboard to reenergize the entire team to work toward these goals. To return to the Procter & Gamble example: In response to not meeting its deforestation goals, the company disclosed its forestry policies and progress in an annual “Forestry Practices Update” and made supplemental information easily accessible to interested parties. Procter & Gamble’s willingness to make its efforts more transparent speaks volumes about its accountability on forestry practices.

A final caveat: Transparency and accountability are not synonymous. Being up front is a first step toward accountability, but companies must still have the courage to own up to their failings and stick to their commitments. We must not think of transparency and accountability as interchangeable for sustainability to truly take off.

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August 01, 2023

Libby Woolnough
Group Head - Corporate Reputation & Brand Purpose, WE Communications Australia