Standardizing Sustainability
Japan takes a step toward eliminating misinformation known as "greenwashing"
A sustainable practice for me may be unsustainable for you, whether because of culture, economy, political environment, or geography.
For example, I have easy access to contraception. There are also very few social mores against using it. But around the world there are hundreds of millions of people who lack such access and/or face social pressure not to use contraception. For instance, both access to and use of contraception varies by region in India, the world’s most populous country as of 2022. There, politicians have been raising sustainability concerns about overpopulation since as early as 1937.
With such variability in culture, economy, political environment, or geography, is it even possible to standardize sustainability?
From the United Nation’s 1987 World Commission on Environment and Development report titled “Our Common Future,” the answer appears to be a resounding “no.”
No single blueprint of sustainability will be found, as economic and social systems and ecological conditions differ widely among countries. Each nation will have to work out its own concrete policy implications. Indeed, the Commission, chaired by Gro Harlem Brundtland—then Prime Minister of Norway and the only political leader at the time with a background as an environment minister—did not even define sustainability. “Yet,” the Commission wrote,
...irrespective of these differences, sustainable development should be seen as a global objective.But the Commission’s definition of sustainable development is not only context-dependent, but future-focused, and so recasts sustainable development not as a “fixed state of harmony, but rather a process of change.”
Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
It contains within it two key concepts:
* the concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and
* the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs. This week, the Sustainability Standards Board of Japan (SSBJ) enacted something that fits within that second bullet point regarding the “idea of limitations.”
For years, regulators in Japan have been raising the bar in terms of sustainability disclosure standards for companies, even revising the corporate governance code for prime market-listed companies to provide sustainability and climate-related disclosures in order to remain on the Tokyo Stock Exchange.
Once implemented, new “sustainability disclosure standards” announced this week by the SSBJ will enable investors to compare those companies’ sustainability practices, which will also help in countering the misinformation tactic known as greenwashing.
"There is no settled definition of greenwashing. Nevertheless, in the context of the finance industry, greenwashing generally refers to the false, deceptive, or misleading statement / representation of the nature and extent to which a financial product, investment strategy, or company has a positive environmental or climate impact."
-- Greenwashing and how to avoid it: An introductory guide for Asia’s finance industry, Japan edition, updated October 2023, co-authored by ClientEarth and the Asia Investor Group on Climate Change, together with external consultant Daisy Mallett The new standards also will help end green-hushing, in which companies underreport or do not disclose their sustainability practices to avoid scrutiny or having to substantiate them.
How might other financial exchanges in other countries create and implement similar standards? By starting with the international version, developed by the International Financial Reporting Standards (IFRS) Foundation. That’s what the Sustainability Standards Board of Japan did.
“A few differences remain” between the SSBJ standards and the international version, said Yasunobu Kawanishi, chair of the SSBJ, wrote on LinkedIn, “but we are committed to monitoring how disclosure practices in Japan and overseas develop in the coming years and to considering changing SSBJ standards if determined necessary.”
What other “ideas of limitations”—such as sustainability standards—could improve sustainability in your habitat?
The idea that companies "greenwash" their practices in order to confuse me, the consumer, has disturbed me for some time. I'm glad to know that Japan is addressing the issue.