Impact calculation tools for the ESG balance sheet

In a world where concern for sustainability is increasing, businesses must take measures to reduce their environmental impact if they want to remain competitive. In all 27 EU Member States, the supply of sustainable products and services is increasing. Unfortunately, however, the phenomenon of greenwashing is also becoming increasingly widespread. The practice is defined as "Presenting an environmentally responsible public image in an unfounded or misleading way, often by making environmental claims that are unclear or poorly supported by solid evidence." This means that not all information on sustainable practices communicated by companies is true and/or easily verifiable. As is now well known, greenwashing seriously undermines market confidence and causes enormous damage to all those companies that are genuinely committed to being sustainable.

Consumer preferences shape the market and require businesses to adapt to remain competitive. Sustainability and reduction of environmental impacts have become central to such preferences. consumers are increasingly aware of the environmental impact of the products and services they purchase, and are willing to pay a higher price for sustainable ones. For example, almost 90% of Generation X is willing to spend more than 10% more for sustainable goods. Even in the B2B context, the environmental impact of products and services has become important as customers seek to integrate sustainability into their purchasing decisions. Companies must therefore design products and services that consider this aspect in order to remain competitive. A recent report by the European Commission highlights the commitment of businesses from the 27 EU countries towards the environment, which includes the offering of sustainable products and services.

Communication is crucial to business commitment towards sustainability. Communicating action to reduce environmental impacts is essential to improve reputation and generate confidence among customers and consumers. It is an important source of competitive advantage in terms of reputation and profit. The transparency and accuracy of green information is crucial to educate consumers about sustainability and guide informed choices. However, exaggerated or misleading information creates mistrust of sustainability claims and harms companies that actually offer sustainable products. The National Geographic identified "providing false information about environmental impacts" as the main reason why consumers avoid 'green' products. This also harms companies that strive for sustainability.

Marketing and communication practices that attribute a false ecological image to products or services are known as 'greenwashing'. These practices include the use of unverified environmental labels and certifications, as well as the use of sustainable claims that are not backed by actual change or commitment. Companies tend to greenwash in order to exploit the growing attention to environmental issues and, consequently, to increase sales, attract new customers and improve their public image, without necessarily committing to concrete actions to reduce the environmental impact of their activities. The result? The market becomes sceptical and distrustful of companies' sustainability claims. Greenwashing can also have repercussions when drafting the ESG sustainability report, which must comply with legislation and the reporting standards and not be a vague and imprecise document.

On 22 March 2023, the European Commission presented the proposal for a Directive on Green Claims (No. 85/2023), with the aim of regulating environmental impact statements more concretely and thus combating greenwashing. The Directive originates from a study conducted by the Commission itself in recent years, which found that out of 150 claims concerning the environmental characteristics of products, 53.3% were "vague, misleading or unfounded". In order to prevent misrepresentations from fuelling mistrust among customers and consumers and creating inequalities between companies, the Directive foresees specific measures to ensure the transparency and veracity of information on the sustainability of products and services offered. It is clear from the Directive that what the market requires is not, for example, more labels to be placed on products, but objective and comparable information (over time and between different countries).

In order to obtain objective and comparable information on environmental impact, it is necessary to use valid and internationally recognised calculation tools such as the Life Cycle Assessment (LCA) and the Carbon Footprint (CF). In general, LCA and CF are used to assess the environmental impact of a product, service, activity or process, in terms of natural resource use, greenhouse gas emissions, air, water and soil pollution, waste generation, energy consumption and so on. These tools tie in with the issues of sustainability reporting and are crucial as they allow for the assessment of these impacts throughout the entire life cycle, from raw material extraction, production, transport, use and disposal. This allows businesses to monitor their impacts, identify opportunities for improvement and provide truthful information on the sustainability of what they produce and offer.

In this context, 3Bee sees itself as a leading Nature Tech company: we are experts in sustainability and support entities and businesses in realising regenerative projects through technology. That is why we have created a practical guide that can help companies understand how to efficiently and effectively calculate, improve and communicate their environmental impact, including within their report or ESG sustainability report. Want to learn more?