Closing the Greenwashing Gap: The New ESG Imperative for Business Integrity and Growth

The era of glossy, overly repetitive, and self-promotional ESG and Sustainability claims is quickly coming to an end. 

As international standards, like those established by the ISSB, gain traction, there is growing consensus on the necessity for forward-looking methodologies to properly evaluate the short, medium, and long-term risks and opportunities for a company's cash generation, as well as its impacts on the planet, society, and the fair distribution of prosperity. These methods are crucial, not only for driving business growth but also for allowing investors to protect the transfer of wealth. 

This perspective is corroborated by PwC’s recent Global Investor Survey, in which nearly all participants (94%) indicated that corporate reporting often includes unsupported sustainability claims, commonly known as #greenwashing, with sustainability disclosures being the least trusted information published by companies. 

As well, nations are facing criticism for their absence of concrete targets, strategies, and procrastinated measures. The Auditor General of Canada’s examination of Canada’s 2030 Emissions Reduction Plan found that 95% of the government's 80 actions lacked a designated target or an anticipated reduction in emissions. “The stakes for failing to mitigate climate change grow ever higher, and the window of opportunity to reduce emissions and meet the 2030 and 2050 targets is rapidly closing,” states the report.  

This signifies a shattering of trust that won’t be ignored. Clearly, the expectations of investors, stakeholders, and society at large are elevated, and tough questioning of business strategies is revealing unfounded claims of commitments and progress.  

For SMEs, the demand for trustworthy information poses both a challenge and an opportunity. The challenge lies in upholding brutal honesty and transparency about the risks and opportunities they will face, both now and a decade from now. The opportunity emerges as these discussions and strategic development processes get underway, where prioritizing resilience becomes key to business growth and maintaining trust. 

To facilitate this, SMEs should ensure their reporting aligns with standards such as those issued by the ISSB, the CSRD in the EU, or the SEC’s proposed climate disclosure rule in the US. This alignment will help businesses meet the expectations of their largest customers, who will themselves be expected to disclose this information throughout their supply chain. To guide these discussions, a useful starting point is the SASB’s SICS, which offers a research-backed catalog of issues investors expect to be disclosed by industry. 

For SMEs, now is the critical moment to seize this chance, firmly establish a transparent and accountable ESG framework, and demonstrate true commitment to sustainability before this window closes and the market demands it as a standard. Those who act swiftly and sincerely will capture the trust and loyalty of stakeholders, securing their place at the forefront of a responsible business future.  

In short, embrace the advice of Jack Welch, “Change before you have to.” Anticipate risks and opportunities, innovate proactively, and don’t wait until change becomes your only option.