Ethics Washing – Top Tips To Help Protect Your Charity – Diversity, Equity & Inclusion

Ethics washing – top tips to help protect your
charity

Ethics washing, greenwashing, bluewashing, pinkwashing, ethical
laundering, eco washing…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 brand to the public. Simple mistakes,
inaccuracies or misleading claims can have big consequences,
risking lasting reputational damage among key stakeholders, loss of
income and even regulatory intervention.

We can help you protect your charity’s good name and avoid
ethics washing based challenges, so have put together our top tips
to help minimise the risks.

What is ethics washing?

Ethics washing, a term not too dissimilar from greenwashing, is
used to describe the practice of organisations sharing false or
misleading information about themselves to paint their organisation
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 against applicants when
recruiting. By making false claims, organisations may be deceiving
their stakeholders into believing they are having a more positive
impact on society than they really are.

What are the consequences?

Being accused of ethics washing, 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 stakeholders, donations and support from volunteers
may run short and valued employees might look elsewhere, all with
potentially devastating consequences for the charity. This is
already happening, particularly in the commercial sector; it was
recently reported that Boohoo
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 documentary.

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 shining 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 staff 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
“washing”, for example greenwashing, 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 potential to face legal action in
respect of unfair commercial practices; the Digital Markets,
Competition and Consumer Bill, likely to be enacted in mid-late
2024 gives the Competition and Markets Authority increased powers
(including imposing monetary penalties without the need to go to
court) to tackle misleading actions and omissions, including in
respect of ethical or greenwashing claims likely to mislead the
average consumer into taking a transactional decision which they
would not have taken otherwise. Although 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 washing.
For example, if your charity lobbies against 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 staff 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,
should make your position more defensible and help you to avoid
potential issues in the future. Make sure they all align with each
other and support the values which your charity prides itself
on.

2. Be honest 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 honest 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 honest
about the credentials of the work your charity is doing then you
could face difficult questions, including from the Advertising
Standards Authority and potentially 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 falsehood?

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 show 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 something 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 washing
by your corporate partners

It goes without saying that you should 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 organisations that use
their public support of an environmental or social initiative to
conceal the fact that they are not doing much to incorporate those
values into their organisation. Pay attention to whether they rely
heavily on ‘buzzwords’ such as ‘eco-friendly’ or
‘socially responsible’ without 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 homework.

When entering into commercial partnership 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 sponsorship 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
partnership agreement allows you to terminate the agreement if the
commercial partner causes any reputational damage to your
organisation and be ready to make a public statement distancing
yourself from them.

4. Choose 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 choose funds which are ethically sound and where you can
track exactly how your money is being invested. If you offer your
employees a pension, consider switching it to a more
environmentally sustainable and ethical fund – there are
plenty on the market. Evidence shows 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 organisation’s supply chain typically accounts for over
ten times more emissions than its operations
and is a potential source of significant risk on diversity issues,
especially modern slavery. Understanding and addressing the impact
of your supply chain is key for any charity that wants to maximise
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 potential 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 slavery. If your
charity offers free gifts to donors or fundraisers, or perhaps
produces branded 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 brand is protected

It’s important that your Intellectual Property, brand and
trade names and mark(s) are protected so that you have the power to
stop other parties from using branding 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 assisting charities in these matters, whether
that’s helping respond to claims or complaints, helping with
commercial participator 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 organisations 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 should be sought
about your specific circumstances.