Impact-washing - What is Impact-washing

August 11, 2023
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Greenwashing is not a novel concept. It has been in circulation since the 1980s.

Recently, “impact washing” has been added to the lexicon by organisations and civil society groups to hold companies and organisations accountable for their green claims.

Impact washing can be defined as any claim about a product or service or investment triggering a change in the economy or society or natural environment that cannot be supported by evidence.

“Many financial institutions pretend that a change in the composition of their portfolio (such as reducing the exposure to the oil sector) automatically delivers environmental impacts,” explains Stanislas Dupré, Founder of the think tank 2° Investing Initiative and Convenor of the ISO working group that developed ISO 14097.

Dupré adds, “Today, impact washing is the norm rather than the exception. When my think tank reviewed the practices of asset managers in Europe in 2020, we found that many of them were making environmental claims and that almost all of these claims were misleading and non-compliant.”


How to stop impact-washing

To fight “Impact-washing” and to understand more deeply the impact of investments on the populations served, investors can:

  • not only require their investees to report on a set of common impact indicators but also run periodic in-depth impact studies, field visits, and partner with external evaluation and assessment agencies.
  • evaluate business as usual scenario, i.e. examine positive and negative effects on environment, society and economy in the absence of investment
  • set realistic, evidence-based targets, then monitor and measure outcomes and impacts using credible data or evidence.

A few tools have been created for governments, policymakers, and regulators to tackle the issue of impact washing:

  • the standard ISO/TS 17033, Ethical claims and supporting information — Principles and requirements, which sets out internationally agreed ways to make a credible ethical claim
  • the standard ISO 14097 - Greenhouse gas management and related activities — Framework including principles and requirements for assessing and reporting investments and financing activities related to climate change, ​​which sets a benchmark for reporting financial institutions’ climate actions.
  • the standard ISO 14021:2016 - Environmental labels and declarations — Self-declared environmental claims, which specifies requirements for self-declared environmental claims, including statements, symbols and graphics, regarding products. It further describes selected terms commonly used in environmental claims and gives qualifications for their use in order to avoid green washing.

In conclusion…

Demonstrating impact has not always been high on the agenda. However today, all organisations need to actively demonstrate, monitor and verify their positive and negative impact on people, planet and economy.

Measuring their impact is crucial to prove environmental and social commitment to citizens, investors, stakeholders, employees, and customers.

It will become the new standard so companies have to get prepared for the use of impact measurement frameworks and impact reporting.

In order to meet these demands, consolidation of methodologies, consistency in measurements and valuations and the increase in collaborations at a sector level to ensure comparability and transparency are expected in the coming years.

Impact-washing - What is Impact-washing

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