In recent years, greenwashing has been a rising concern echoing across boardrooms and regulatory circles alike. With a growing awareness of the global climate crisis, consumers are also increasingly expecting companies to align with a more sustainable operating model.

In parallel, businesses are jumping on the bandwagon for sustainable products and services, along with the risk that more will look to embellish their green efforts to get a bigger piece of the pie.

As Singapore commits to achieve net-zero emissions by 2050, all the stakeholders will have key roles to play in this green transition. However, amid the need to ensure compliance with an ever-growing labyrinth of sustainability regulations, businesses can inadvertently fall into the trap of greenwashing – deliberate or unintentional – when the representation of their sustainability initiatives lack clarity.

Regulatory shifts

A common pitfall leading to greenwashing allegations is the lack of clear measurement metrics in qualifying sustainability efforts. As such, there are massive dollars flowing into greenwashing investments that are touted as sustainable, but essentially do nothing to reduce emissions.

To tackle greenwashing claims, regulators around the world are moving towards implementing reporting standards for greater accountability.

In June 2023, the International Sustainability Standards Board (ISSB) issued its inaugural global sustainability disclosure standards, which are built on the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD).

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These standards represent a positive step forward in establishing a global baseline to promote transparency and global comparability. The UK government was the first to adopt the new standards, with several countries including Singapore considering their use as well. In the US, the forthcoming standards by the Securities and Exchange Commission are expected to draw parallels from the TCFD recommendations.

The scrutiny on greenwashing is also growing across Asia. The Hong Kong Monetary Authority has found that greenwashing is common in the global green bond market, as about one-third of corporate issuers are found to have a poorer environmental performance after their initial green bond issuance.

In Singapore, regulators are proposing mandatory climate reporting for listed companies from fiscal year 2025, followed by large non-listed firms from FY2027. Earlier in April 2023, the Monetary Authority of Singapore unveiled a Finance for Net Zero Action Plan that outlines its strategies for green and transition financing, and for benchmarking environmental reporting standards to safeguard against greenwashing.

Data challenges

Climate reporting has emerged as the modern counterpart of financial reporting in the corporate sphere. However, while companies are accustomed to financial reporting, the adoption of sustainability disclosure standards is still in its infancy.

Currently, there is a lack of verifiable data to assess whether sustainability credentials are indeed authentic and accurate. The data gaps are further exacerbated when businesses are unable to track the indirect emissions from both upstream and downstream operations. From energy consumption patterns to supply chain intricacies, the range of data sources is expansive, reflecting the multifaceted nature of sustainable operations. Yet, this massive data landscape poses an array of challenges. With data being stored across multiple locations, the risk of data breaches and ransomware attacks multiplies. There is also the issue of data deluge, making it hard to provide full visibility of a company’s sustainability efforts.

Harnessing data and tech

To fulfil their net-zero pledges, it is critical for businesses to harness the power of data and technology. Given the multitude of existing regulations across different jurisdictions, the path to progress lies in adopting a standardised data framework with the use of advanced technology solutions – to provide clarity on the reliability of data, along with robust controls to ensure its accuracy and relevance. This can empower stakeholders with data-driven insights and enable well-informed decisions.

For a start, companies can establish a baseline and set specific targets with clearly defined goals and actionable plans. It is important to engage with key internal stakeholders to map out the entire sustainability strategy and create a checklist to ensure appropriate governance of people, processes and technology are put in place.

Companies can proactively use the accumulated data and analytics to monitor their progress towards achieving their net-zero objectives. For instance, when a company buys carbon credits or invests in carbon projects to offset their emissions, the data collected will serve to verify if those credits are both active and valid.

Additionally, data holds the power to counter greenhushing – the antithesis of greenwashing – in which companies are opting to stay silent about their carbon emissions, sometimes for fear of public backlash. While it is not inherently unethical, companies miss out on the opportunity to enact meaningful transformation.

To achieve effective climate reporting, businesses can collaborate with third-party technology platform providers to leverage their advanced data management tools and standardised reporting frameworks. By embracing these partnerships, businesses can gain access to reliable data streams, streamline data analysis, and close the gaps in climate reporting.

These collaborations also enable businesses to safeguard their data security. For instance, by adopting autonomous cloud-based data management that can reduce carbon footprints, coupled with artificial-intelligence-driven malware scanning and anomaly detection, organisations are on the right track to advance their sustainability agenda while automating protection from cyber threats.

The rationale for the fight against climate change is clear but not easy, as decarbonisation is expensive. The journey towards an eco-friendly future requires more than good intentions or spinning of positive green credentials. There is no silver bullet to catalyse the net-zero transition. It is imperative for organisations to harness data and technology, with transparency and accountability, to tackle greenwashing in the transition to a more resilient and sustainable future.

The writer is vice-president and managing director for Asia South and Pacific Region for Veritas Technologies.