More companies are starting to recognize that one of the greatest sources of impact they can have is through advocacy on smart public policy. See our guidance on running a successful advocacy campaign in this blog. But successfully engaging in the regulatory process can produce hidden conflicts and barriers in the form of trade associations. If you're not careful, what could be a real source of credibility and trust with consumers can backfire. Here's a quick review of the risks and an overview of how to assess them through an audit.

Many companies who on consumer-facing brands are sensitive to the fiscal risks associated with greenwashing. While corporate political initiatives commonly include more than just participation in trade associations (i.e., political spending, lobbying, etc.), that participation can represent a disproportionate share of risk related to greenwashing. In a nutshell, here’s how the greenwashing risk for businesses is generated:

• Company A makes public statement B or takes action C on a public policy issue.

• Company A is also a member of trade association D.

• Trade association D is actively working in opposition to position B and action C of Company A.

• Company A unnecessarily inherits greenwashing risk due to misalignment between its position/action and those of trade association D on the public policy issue.

This includes three types of fiscal risks for businesses related to greenwashing: regulatory, legal, and reputational. By examining the alignment between businesses and their trade associations through an objective third party audit we can reduce the risk associated with greenwashing.

When it comes to understanding the stakeholder landscape related to any public policy, trade associations often have a significant role. We often see them working in opposition to public policies that address material sustainability impacts in and across industries, but not always. They frequently will also hire outside lobbying firms to represent their interests. A Trade Association Audit has one primary objective: Identifying and mitigating current or future greenwashing risks associated with misalignment between the policy positions of your business and trade associations that you may be members of now or in the future. Our audit process features three phases: 1) Organization Identification, 2) Position Analysis, and 3) Risk Mitigation.

During the first phase of our trade association audit we need accomplish a relatively straightforward objective: Identifying which trade associations you belong to and what their positions are on key sustainability topics that are relevant to your company. The membership part of this objective should be pretty simple to ascertain. You’ll probably need to inquire with the team that manages government affairs, public affairs, regulatory compliance, or legal depending on where that responsibility lives at your company. To determine the policy positions of the trade associations to which you are members take a look at their website as a starting point. You’ll may need a login to access this kind of information since these organizations are notoriously opaque about who they represent, the jurisdictions they are active in, and they specific positions they are taking on active legislation or policy concepts.

A nice co-benefit of this kind of research: It will serves as the foundation for identifying misalignment and mitigating risks when it comes to taking a public position on existing or proposed laws & regulations. If you're planning an advocacy campaign, then you can also use this analysis into your campaign plan. It's a safe bet to assume that a trade association of some kind will play a role in your advocacy campaign.

The second phase of our audit involves analyzing the alignment between your companies sustainability policies, practices, and positions and those of the trade associations with which you are members. Importantly, we need to understand if there are current or anticipated conflicts between the positions of the trade associations and those of your business. As we previously noted, these misalignments may be one of the root causes of potential greenwashing risks for your business. To conduct a thorough analysis of where your company stands on any given sustainability issue (e.g. climate change, chemicals management, living wages, unionization, etc.) you’ll want to look at more than just public statements about specific pieces of legislation. While those should be your starting point, you’ll also want to look at internal company policies on these issues, goals, press releases, social campaigns, etc. The reason you want to be comprehensive is that you want to avoid hypocrisy. Telling your customers, employees, and other stakeholders that you care about any

The final phase of our audit involves using our findings from our position analysis to craft a risk mitigation plan. The purpose of the plan is to proactively identify and address misalignments between the public positions and actions of your business and those of relevant trade associations. Remedying any misalignments through plan implementation (aka action) will be the key to reducing risks and protecting your company’s credibility. The plan typically includes one or more of the following strategies and their associated tactics:

1. Create new trade association policy position(s)‍

This approach involves using your membership in the trade association to advocate for a new policy positions that is aligned with your company’s.

2. Eliminate existing trade association policy position(s)

This approach involves using your memberships in the trade association to advocate for dropping the current policy position and not taking a new one.

3. Publicly withdraw trade association membership

Depending on the context (i.e. association leadership, number and nature of other members, etc.), this may be your first or last option. In cases where you can see no viable pathway for successful advocacy as described above, then push internally for you company to drop it’s membership. If successful advocacy seems viable, and you need to pursue it to justify withdrawal to internal stakeholders, then this may be your last option.

We often also integrate the findings of our audit into the advocacy campaign strategy. Contact us if you'd like to find out how Hilde can support your advocacy efforts.