Greenwashing has emerged as a pervasive challenge, undermining genuine sustainability efforts and misleading consumers, where environmental consciousness is on the rise
Greenwashing involves the deceptive presentation of products, services, or organisational practices as environmentally friendly, ultimately eroding trust and hindering progress towards a sustainable future. As we delve into the concept of greenwashing, we explore the underlying reasons behind it, the strategies to avoid falling victim to greenwashing, some examples of effective, and truthful, sustainable green marketing and the European legislation in place to counteract this deceptive practice.
Greenwashing encompasses various deceptive practices, often categorised as the seven sins, as identified by TerraChoice, an environmental marketing agency:
1. The Sin of the Hidden Trade-Off, which occurs when companies highlight a single environmental attribute while ignoring or downplaying other negative environmental impacts associated with their products or services. For example, clothing companies use “natural” or “recycled” materials while the clothing is actually developed through exploitative conditions.
2. The Sin of No Proof occurs when companies make environmental claims without providing transparent evidence or credible third-party certifications to substantiate their assertions. It relies solely on unsupported assertions, thus misleading consumers.
3. The Sin of Vagueness is a very characteristic example of greenwashing. Many companies and products are using imprecise terms such as “eco-friendly”, “all-natural” or “sustainable” without clearly defining their meaning or offering concrete evidence to support these claims. As an example, Arsenic is naturally occurring but also poisonous. “All natural” isn’t necessarily “green”.
4. The Sin of Irrelevance involves making claims that may be technically true but have no significant environmental benefit or relevance, thereby it is used to mislead consumers. For instance, promoting a product as “CFC-free” when such chemicals have been banned for years.
5. The Sin of Fibbing refers to outright false or deceptive claims about a product or company’s environmental benefits. Companies may manipulate data or exaggerate the positive impact of their actions to appear more environmentally responsible than they genuinely are.
6. The Sin of Lesser of Two Evils occurs when promoting a product or service as environmentally friendly compared to alternatives, even though both options may have substantial negative environmental impacts, diverting attention from the larger ecological issue at hand. Organic cigarettes made with organically grown tobacco and unbleached papers may have fewer environmental impacts than other cigarettes, but there is still nothing healthy or sustainable about smoking.
7. The Sin of Worshiping False Labels is when companies exploit consumers’ trust in eco-labels by creating their own misleading labels or mimicking reputable ones. This sin capitalises on the lack of regulation in the labelling industry.
But why do companies engage in greenwashing? Environmental, Social, and Governance (ESG) criteria in business are becoming a major topic in the corporate world and companies face pressure from consumers to address ESG issues, while sustainable marketing campaigns have become increasingly prevalent because of that. More and more investors are looking to allocate funds in organisations that are aligned with good practices in the environmental, social and corporate governance (ESG) fields.
Much like digital transformation, driving sustainability requires organisations to transform every division of their business. The pressure on companies to become sustainable is manifested on several levels. First, millennials and Gen Z are asking more and more questions about the impact of companies, products, and services on the environment, society and governance. Second, scientists clearly state that we need to take measures to avoid irreversible damage, which forces decision-makers to adopt environmental regulations and plans to reduce carbon dioxide and pollution and to commit to environmental goals. Finally, investors (banks, funds, etc.) are increasingly requiring companies to understand environmental, climate, and social risks and to include them in overall risk assessments.
Many companies engage in greenwashing to improve their public perception and enhance their brand image. Being seen as environmentally responsible can attract more customers, boost sales, and improve their reputation in the market. By creating an illusion of sustainability, companies hope to align themselves with the growing consumer demand for eco-friendly products and services. This can lead to a perceived advantage, attracting consumers who prioritise sustainability.
Being perceived as “green” can be financially advantageous for companies. Studies have shown that consumers are often willing to pay a premium for products or services that are perceived as environmentally friendly. By falsely marketing their products as sustainable, businesses can ask for a higher price and increase their profit margins.
Furthermore, some companies exploit the lack of comprehensive regulation and oversight in some regions, and strict enforcement mechanisms to monitor and penalise deceptive environmental claims. It is difficult for consumers to verify a company’s claims and therefore, customers can be easily tricked into believing that the products are indeed environmentally friendly when in fact they are not. As a result, companies find it easy to publicise untrue and misleading claims to gain competitive advantage. It is also difficult to measure and quantify the impact of a climate initiative. This leaves room for manipulations and creates an environment where greenwashing can thrive. Insufficient regulation allows businesses to exploit the growing interest in sustainability without making genuine efforts to improve their environmental performance.
Environmental issues are often complex and multifaceted, making it challenging for consumers to verify the accuracy of green claims. Companies can also exploit this complexity by presenting selective information and greenwashing takes advantage of consumers’ limited knowledge and understanding of these complex environmental issues.
Despite the growing interest in sustainability, not all consumers have a deep understanding of ESG issues or the ability to differentiate between genuine sustainability efforts and greenwashing. Lack of awareness or access to reliable information can make consumers susceptible to deceptive marketing tactics. Without the necessary knowledge or tools to evaluate sustainability claims, consumers may unknowingly support greenwashing practices.
Some companies may regard sustainability seriously, but in their enthusiasm, they might make mistakes and unintentionally engage in greenwashing. In their eagerness to publicise their successes, businesses can sometimes jump the gun before all the evidence backing up their claims are in place. This can hinder and negatively impact what might actually be a positive accolade for the company. Additionally, many companies just don’t have the expertise to know what is truly environmentally or socially beneficial, and what isn’t. Some misleading claims are made by a company because of their ignorance of legislation, or a lack of understanding of what is expected of them.
There’s of course a backlash to greenwashing practises.
The company’s and/or brand’s image can take a hit. This can further lead to a drop in sales when consumers go so far as to boycott a company they perceive as dishonest. The negative effect greenwashing has on the brand’s image should be serious enough for every business to carefully consider the content and quality of their marketing.
With consumers increasingly prioritising environmental responsibility, greenwashing can negatively impact a business’s reputation and consumer trust. It’s important for businesses to understand what greenwashing is and how to avoid it. It has been studied, that the loss of consumer trust caused by greenwashing is not only limited to the brand caught greenwashing, but it also impacts other brands operating in the same sector who are not engaging in similar practices.
If a sustainability claim made by your company seems noticeably misleading, and the public starts questioning it, it’s possible that someone might report your advertisement or communications to the local consumer protection authority. Meanwhile, it is also possible for the local consumer protection authority to open their own independent investigation on such marketing claims. A company that wishes to keep up its image does not wish to have a public investigation opened into its marketing or other communication.
For example, in 2015 the United States Environmental Protection Agency (EPA) issued a notice of violation to Volkswagen after the company was found to have installed software in their diesel vehicles that manipulated emissions tests to meet regulatory standards. This deliberate deception portrayed their vehicles as environmentally friendly, while in reality, they were emitting significantly higher levels of pollutants. Volkswagen had seen a serious sales drop that year after this major scandal also known as “Dieselgate.”
It is important to note that allegations of greenwashing are subject to ongoing debate and may be influenced by evolving standards and public perception. These examples serve to illustrate the challenges companies face in maintaining consistency between their environmental claims and their actual practices, particularly in industries associated with significant environmental impacts.
To mitigate the risk of falling victim to greenwashing, consumers and companies can employ the following strategies:
• Educate yourself and acquire knowledge about sustainable practices, recognised certifications, and reliable eco-labels to discern genuine environmental responsibility from deceptive claims. Familiarise yourself with environmental issues relevant to the products or services you seek. This knowledge will empower you to ask the right questions, recognise genuine sustainability efforts, and identify misleading claims.
• Trustworthy third-party certifications and labels can help verify a company’s environmental claims. Look for certifications from reputable organisations that have rigorous standards and independent verification processes. Examples include EU ecolabel, Energy Star, Fairtrade, USDA Organic, and B Corp. These certifications provide assurance that the product or service meets specific environmental criteria.
• Evaluate the entire lifecycle of a product or service, from production to disposal. Sustainable products should minimise environmental impacts at every stage, including sourcing of raw materials, manufacturing processes, energy usage, packaging, transportation, use, and end-of-life management. Look for companies that prioritise sustainable sourcing, energy efficiency, waste reduction, and recycling initiatives throughout the product’s lifecycle.
• Transparent communication is vital in sustainable green marketing. Look for companies that openly share information about their environmental practices and impacts. They should disclose their methodologies for measuring and substantiating their environmental claims. Companies that are transparent and responsive to customer inquiries about sustainability demonstrate a genuine commitment to accountability.
For businesses aiming to engage in sustainable green marketing and can navigate through the pitfalls of greenwashing and actively contribute to the advancement of genuine sustainability practices, the following approaches are recommended:
Authenticity: Develop a genuine commitment to sustainability, aligning it with your core values and practices. Avoid exaggerated or false claims and ensure that sustainability permeates your entire organisation.
Transparency: Provide clear and transparent information about your environmental practices, certifications, and achievements. Communicate your environmental goals, progress, and areas for improvement openly and honestly.
Substantiation: Ensure that your environmental claims are backed by reliable data, scientific evidence, or recognised certifications. Avoid vague or misleading statements that lack concrete evidence.
Holistic Approach: Address the full lifecycle of your products or services, incorporating sustainable practices at each stage. Demonstrate continuous improvement and communicate your efforts authentically.
While greenwashing has become a prevalent problem as sustainability has grown in importance, efforts have been made by the European Union (EU), to regulate greenwashing through legislation and guidelines. The Directive 2005/29/EC prohibits unfair business-to-consumer commercial practices, including misleading environmental claims. It provides a legal framework for addressing greenwashing practices within EU member states. The European Advertising Standards Alliance (EASA) Best Practice Recommendations, outline guidelines for truthful and non-deceptive environmental advertising. They help advertisers comply with legal requirements and promote responsible marketing communication.
The Taxonomy Regulation and Delegated Acts describes a list of investments that can be labelled and marketed as green or sustainable in Europe. However, the Commission decided to classify certain uses of fossil gas and nuclear plants as environmentally “sustainable”, leading to accusations for greenwashing by many civil society organisations. This has resulted in a lawsuit on April 18, 2023 by four environmental NGOs (ClientEarth, WWF, Transport & Environment and BUND), against the European Commission’s refusal to remove fossil gas from the EU’s sustainable finance Taxonomy.
Lastly, the EU has introduced the Green Claims Directive, also known as the EU Green Claims Regulation (Regulation (EU) 2019/1020), to address greenwashing and promote accurate environmental claims. The EU Green Claims Directive, which came into effect on October 1, 2022, aims to harmonise rules for environmental claims made by businesses across the EU. It establishes a framework to ensure the credibility and reliability of environmental information provided to consumers.
The EU Green Claims Directive represents a significant step in combating greenwashing within the EU. By establishing clear guidelines and promoting transparency and credibility in environmental claims, it aims to empower consumers to make informed choices and support genuinely sustainable products and services.
In conclusion, greenwashing poses a significant challenge in the pursuit of sustainability and remains a challenge in today’s marketplace, eroding consumer trust and hindering genuine sustainability efforts. It can also contribute to a lack of trust between businesses and consumers, making it challenging to differentiate between truly eco-conscious practices and mere marketing tactics.
By familiarising themselves with the seven sins of greenwashing, understanding the underlying motivations, and employing effective strategies, consumers can avoid falling prey to deceptive environmental claims and can play a vital role in promoting actual environmental responsibility. Simultaneously, businesses must adopt sustainable green marketing practices based on authenticity, transparency, substantiation, a holistic approach, and effective education and communication. By collectively addressing greenwashing and promoting genuine sustainability, we can foster a greener future built on trust, integrity, and responsible environmental stewardship.
This article has been prepared by Grow Sustainability Consulting
