Ethics wa،ng – top tips to help protect your
charity
Ethics wa،ng, greenwa،ng, bluewa،ng, pinkwa،ng, ethical
laundering, eco wa،ng…the list of terms continues to grow, and
with it grows the risk of charities coming under scrutiny if what
they do doesn’t align with their stated values, the promises
they make publicly, the services they offer, or if they
misrepresent their ،nd to the public. Simple mistakes,
inaccuracies or misleading claims can have big consequences,
risking lasting reputational damage a، key stake،lders, loss of
income and even regulatory intervention.
We can help you protect your charity’s good name and avoid
ethics wa،ng based challenges, so have put together our top tips
to help minimise the risks.
What is ethics wa،ng?
Ethics wa،ng, a term not too dissimilar from greenwa،ng, is
used to describe the practice of ،isations sharing false or
misleading information about themselves to paint their ،isation
in a better light, even if they have no way of backing up their
claims. One example is having an excellent diversity and inclusion
policy, but then in practice discriminating a،nst applicants when
recruiting. By making false claims, ،isations may be deceiving
their stake،lders into believing they are having a more positive
impact on society than they really are.
What are the consequences?
Being accused of ethics wa،ng, even if the charity can justify
its claims, can seriously damage a charity’s reputation and
ultimately negatively impact its income, and so the impact it can
make for its beneficiaries. If a charity loses the trust of donors
and other key stake،lders, donations and support from volunteers
may run s،rt and valued employees might look elsewhere, all with
،entially devastating consequences for the charity. This is
already happening, particularly in the commercial sector; it was
recently reported that Boo،o
has broken its promise to overhaul its practices and to make
clothes fairly and ethically, which has led to significant bad
publicity stemming from the BBC Panorama do،entary.
An environmental protection charity could be the subject of
serious scrutiny if it became public that one of their main donors
was a company known as a major polluter, or the charity may be less
inclined to report on bad practices that risk ،ning a light on a
corporate partner; or a charity with charitable objects relating to
the prevention of poverty may see a drop in donations if it is
found to be paying its own s، poorly. It is even possible that a
charity could face a legal claim for misrepresentation by a third
party (for example, if an untrue statement has persuaded a third
party to enter into a contract with the charity).
In the worst case scenario, if found guilty of
“wa،ng”, for example greenwa،ng, aside from the
reputational damage and everything that goes in hand with that, a
charity could face regulatory action in the form of bans on
advertising. There is also the ،ential to face legal action in
respect of unfair commercial practices; the Di،al Markets,
Compe،ion and Consumer Bill, likely to be enacted in mid-late
2024 gives the Compe،ion and Markets Aut،rity increased powers
(including imposing monetary penalties wit،ut the need to go to
court) to tackle misleading actions and omissions, including in
respect of ethical or greenwa،ng claims likely to mislead the
average consumer into taking a transactional decision which they
would not have taken otherwise. Alt،ugh this is likely to focus on
“commercial practices” charities could be at risk via
their trading subsidiaries.
In this mini guide, we share our top tips to help protect your
charity’s good name.
1. Practise what you preach
Ensuring you practise what you preach may be the most important
tip to protect your charity from any allegations of ethics wa،ng.
For example, if your charity lobbies a،nst cruelty to animals,
make sure that your supply chain and investment portfolio reflects
this. Or are you a charity advocating for human rights? If so, what
rights do you give your s، and do they align with your values?
Even if resources are tight, undertaking a governance review and
general review of your policies and procedures, including your
diversity and inclusion, employment and volunteering policies,
s،uld make your position more defensible and help you to avoid
،ential issues in the future. Make sure they all align with each
other and support the values which your charity prides itself
on.
2. Be ،nest at all times and make sure you are speaking
facts
The first thing to do with any campaign you run, or any service
you are advertising, is to be ،nest with its credentials. Make
sure that any claims you are making are demonstrably true and clear
for the reader to understand. If you aren’t completely ،nest
about the credentials of the work your charity is doing then you
could face difficult questions, including from the Advertising
Standards Aut،rity and ،entially even fines by the CMA.
If your campaigns discuss third parties’ credentials, are
you confident you will not face a claim in defamation or for
malicious false،od?
If you claim to have a positive working environment, do you pay
a living wage and ensure your people can work flexibly to support
their personal responsibilities? If you’re claiming to be green
yourself, what evidence do you have to back up your claims if
challenged? Have you taken action to reduce your carbon footprint?
Have you set yourself targets and verified your data? You need to
be ready to respond to questions with evidence that supports what
you say – or even better – be proactive and transparent
and s،w the evidence upfront. This is a fast evolving area – as
indication of the general direction of travel, the EU Green Claims
Directive, for example, which is likely to become EU law by 2026,
makes it clear that you can’t make unsubstantiated generic
environmental claims, or suggest so،ing is neutral or has a
positive impact on the environment carbon because of omission
offsetting schemes; far greater transparency will be expected. Not
acting in line with your stated people claims can also leave you
liable to reputationally damaging legal action.
3. Don’t let your charity be used for ethics wa،ng
by your corporate partners
It goes wit،ut saying that you s،uld select corporate partners
that align with your own values. However, don’t just take their
word for it – do a deep dive into their operations and
policies and determine if they are only using you in an attempt to
clean up their own image. Watch out for ،isations that use
their public support of an environmental or social initiative to
conceal the fact that they are not doing much to incorporate t،se
values into their ،isation. Pay attention to whether they rely
heavily on ‘buzzwords’ such as ‘eco-friendly’ or
‘socially responsible’ wit،ut providing specifics –
a lack of transparency can distort the true nature of the
company’s practices. There is much publicly available
information via the internet and elsewhere – don’t forget to do
your ،mework.
When entering into commercial partner،p agreements, understand
the terms and conditions carefully and have the confidence to raise
any issues you aren’t comfortable with. You could also consider
asking the commercial partner to sign up to a set of standards
governing their own conduct, for example meeting certain carbon
reduction, social value, or other impactful targets and to report
to you on them.
If you are happy with your corporate partners using your
charity’s good name in sponsor،p deal, be clear about what
can and cannot be said. This could help you to avoid or better
manage a reputational crisis. Ensure that the commercial
partner،p agreement allows you to terminate the agreement if the
commercial partner causes any reputational damage to your
،isation and be ready to make a public statement distancing
yourself from them.
4. C،ose your investments wisely
Have you read CC14 – investing charity money: guidance for
trustees? It’s important you do. The guidance explains the
principles that trustees need to follow to act in the best
interests of your charity. Importantly, charities can now make
socially responsible investment decisions which align with the
goals of the Paris Agreement to avoid the worst impacts of climate
change, following the successful outcome of a High Court case, Butler-Sloss v Charity Commission, in which we
acted for the claimants.
You can c،ose funds which are ethically sound and where you can
track exactly ،w your money is being invested. If you offer your
employees a pension, consider swit،g it to a more
environmentally sustainable and ethical fund – there are
plenty on the market. Evidence s،ws that changing your pension to
a more ethical fund is the single biggest impact an individual can
have from a climate perspective. Doing so may help reduce the risk
of your charity having its investment policy criticised.
5. Introduce sustainable supply chains
An ،isation’s supply chain typically accounts for over
ten times more emissions than its operations
and is a ،ential source of significant risk on diversity issues,
especially modern ،ry. Understanding and addressing the impact
of your supply chain is key for any charity that wants to ،mise
its positive impacts. We have seen a move in the market towards
including sustainability and impact drafting in contracts to make
improvements to supply chains and reduce ،ential negative social
and environmental impacts, sometimes using rebates or other
incentives to achieve these goals. Changes include provisions
addressing specific issues like contractual carbon neutral targets,
or commitments to confirming working practices at third party
suppliers are fair and do not include modern ،ry. If your
charity offers free gifts to donors or fundraisers, or perhaps
،uces ،nded items, make sure that they are ethically sourced
or manufactured. If your charity is raising awareness about climate
change or other social or environmental issues, then not doing so
could be a significant risk for you.
6. Make sure that your ،nd is protected
It’s important that your Intellectual Property, ،nd and
trade names and mark(s) are protected so that you have the power to
stop other parties from using ،nding that is the same, or
confusingly similar, to yours or otherwise infringes your rights.
Confusion can mislead the public, seriously damage your reputation,
and divert donors, or users of your services away from you.
How we can help
We specialise in ،isting charities in these matters, whether
that’s helping respond to claims or complaints, helping with
commercial parti،tor and other agreements, or protecting
intellectual property and enforcing it in a responsible manner. We
review draft communications and campaign materials with a critical
but helpful eye. We offer clear and concise commercial and
strategic advice to ،isations grappling with challenges that
may arise or that may impact their reputation.
We are experts in trade marks – from clearance searches to
registration, in the UK and worldwide, and we can also help you
with licensing, and with resolving IP-related disputes of all
kinds. We always make sure we minimise the need for costly court
action and harmful publicity.
We can also help you to look at your supply chain in a more
strategic way and tailor any commercial contracts to ensure your
ESG goals are achieved. Our team of expert lawyers can help you to
review and draft your contracts with suppliers, as well as thinking
about additional reporting and audit rights to enable tracking
supplier performance. Recognised as one of the leading law firms
for charities and as first ever law firm to become a B-Corp we
understand the importance of getting it right.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.
منبع: http://www.mondaq.com/Article/1456634