Why do companies overpromise and underdeliver on sustainability?

Part 2 of my Panorama Romania interview

Greenwashing is a still a big challenge. I think that's why there's been a backlash against ESG, especially in Europe. Part of the problem may be that this has been imposed as a regulatory agenda—it's pressure from Brussels, and it can be quite onerous, it can be quite bureaucratic. That puts them into a compliance mindset, and that's not a great reason to do anything. It's hard work with very little reward. If anything, it's the threat of punishment.

So I think what's missing there is for companies to see this as an opportunity agenda. If we bring creativity, then this can be really good for business and really good for markets. These are some of the fastest growing markets in the world—the clean technology and the sustainability markets. And so it's a mental switch into whether this is seen as a compliance and a negative agenda or an opportunity and a positive agenda. That's part of it.

The other part is that companies are often over promising and under delivering, or getting caught out for some instance where they contradict themselves, or they fall short. There is a bigger underlying problem, which is that they're incentivised to have that contradictory behaviour. We have a version of capitalism in most of the world—shareholder driven capitalism—that makes businesses focused on the single bottom line of profits. And so sustainability issues become something on the side. And of course, whenever the going gets tough, they they will trade off sustainability and they will rather favour their own revenues or profitability.

So there's a bigger problem there, but I think it's also about how the companies communicate their journey. There is no perfect company. So what we would like to see from companies that is that they are transparent about the journey that they're on, that they admit when they make mistakes, but that they're still ambitious about where they're going.

I think where customers have a bullshit detector is when companies are saying one thing and doing another. And the best way to uncover this is to look at where they make their investments, not where they do their advertising or their promotions. If you look at the company's investments, are they really going into the solutions, or are they going into maintaining the old way of doing things, and the old products and services, which are often part of the problem?

We see this with the oil and gas companies, as an example. They might talk a little bit about sustainability—although they seem to be doing even less and less of that; they're scaling back their ambitions on that. But if you really look at where they're investing their profits, it's not into the solutions—moving to renewables and electric vehicles and so on—it's back into more oil and gas. And so then you know that, they can't be trusted and they shouldn't get our support, and the same is true of other companies.

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Dr Wayne Visser is holder of the Galp Chair and a Professor of Practice in Regenerative Business, Innovation and Technology at Católica Porto Business School, as well as a Fellow and Head Program Instructor at the University of Cambridge Institute for Sustainability Leadership.

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