Facing the Risk of Greenwashing in the ESG Report of Global Companies: The Importance of Life Cycle Thinking

Abstract

Accurate reporting on the sustainability of business value propositions must be supported by reliable data sources and sound methodologies such as life cycle assessment (LCA). Showing commitment to more responsible activity without quantifying business impacts, or quantifying them only partially, could fall into greenwashing practices. This research aims to analyze to what extent life cycle thinking tools are widespread in global companies' sustainability reports to determine whether companies are practicing greenwashing. The assessment was done through a review of non-financial statements of all the Global Fortune 500 companies, with the results showing that they rarely refer to LCA. More in detail, 80% of the sample does not quantify their environmental impacts through LCA, and almost all of the remaining 20% quantify only a small portion of their impacts. Only two companies use the Social Life Cycle Assessment. Accordingly, large companies are still reluctant to show their actual emissions, as they might contradict their sustainability narratives. This leads to reinforcing the belief that many companies are not making significant efforts to engage in sustainability strategies but are increasingly practicing greenwashing, making their products and operations appear more sustainable than they are.