How to avoid greenwashing in business
As a business, do you accurately communicate you green credentials, and do you know how to avoid greenwashing?
Now, think as a consumer. Do you consistently believe the products you purchase are as green as they are advertised to be?
Again…yes? If so, then you’re in a minority. According to a 2019 Edelman’s Trust Barometer Special Report, a mere 34% of consumers trust the brands they purchase from.
To compound this concern, the report also indicates that 81% of consumers think this lack of trust could be a deal-breaker in their purchase decisions.
In the consumer’s eye, businesses are focused on “making an impression instead of making a change” in the context of sustainability. In this respect, a meager 21% of respondents declared that the brands they buy from have society’s best interests at heart.
When this lack of care concerns our environment, we find businesses guilty of what is termed greenwashing. That is, businesses work to make a good green impression, rather than making an actual green change.
At Green Business Bureau, we want to help businesses rebuild consumer trust through honest sustainability communications and marketing. As such, in this article, you’ll learn how to avoid greenwashing and effectively communicate your environmental responsibility.
Click on the links below to navigate through this article:
- How to avoid greenwashing: Defining corporate greenwash
- How to avoid greenwashing: Understanding the different types of corporate greenwash
- A business guide for Effective Environmental Communication
How to avoid greenwashing: Defining corporate greenwash
The Oxford English Dictionary defines greenwashing as follows:
“Disinformation disseminated by an organization, etc. so as to present an environmentally responsible public image; a public image of environmental responsibility promulgated by or for an organization, etc., but perceived as being unfounded or intentionally misleading.”
In short, if a brand is giving the impression of doing more for the environment than they are in reality, that’s greenwash.
Corporate greenwash is on the rise
A 2020 research project led by the Centre for Innovation Management Research (CIMR) at the Birkbeck University of London, investigated the behavior of large-capital companies with respect to Environmental, Social, and Governance (ESG). The majority of companies were found to cherry-pick favorable data that gave the philanthropic image the brands wanted to create. The study concluded that these companies pursue a greenwashing strategy by overstating their achievement on ESG issues.
In another report, the European Commission conducted a website sweep to analyze online green claims from various business sectors including garments and fashion, cosmetics, and household equipment. They found evidence that in 42% of cases, claims were exaggerated, false or deceptive, and could qualify as greenwash.
But what is driving the rise of greenwash?
Consumer demand for green products is as high as ever. The Global Sustainability Study 2021 revealed a paradigm shift in how consumers view sustainability and a willingness to pay for sustainable products and services. The study revealed that globally, 85% of people indicate they have shifted their purchasing behavior towards greater sustainability in the past 5 years.
It seems we have a dilemma; the demand for environmentally sound and low-impact products is high, yet consumers aren’t trusting the environmental claims of business.
The environmental credentials of a brand may be ineffectively communicated or blatantly exaggerated, regardless, the consequences of greenwashing are the same.
- Tarnish a brand’s reputation. Consumers punish untrustworthy brands by taking away their custom.
- Result in legal conviction by the U.S. Federal Trade Commission (FTC) or the U.S. National Advertising Division.
- Expose consumers (and employees) to toxic, dangerous, and environmentally damaging products.
- Pose an investment risk. Investors are now more aware of greenwashing and want environmental transparency.
How to avoid greenwashing: Understanding the different types of corporate greenwash
Corporate greenwash can’t always be perceived in black-and-white. It takes many forms and has a range of impacts. It’s best to think about greenwash as a continuum, with different degrees of severity.
Accordingly, the Business for Social Responsibility uses a matrix to define effective environmental communication using four separate categories. These categories give us an idea of how the severity of greenwash can differ, how greenwash isn’t always intentionally deceitful, and how effective environmental communication can be defined.
Category #1: Effective Environmental Communications
Effective communication, good environmental value.
Having Effective Environmental Communications is the goal for all brands. These brands are working to improve the social and environmental performance of their products and align these efforts throughout all company processes. This means developing sustainable supply chains, having a strategy and core mission statement for sustainability, and developing effective green communications. The latter means clear communication of efforts accurately, and with the evidence needed to back up claims. These brands operate as green leaders.
Category #2: Misguided Greenwash
Poor communication, some environmental value.
Here, companies do not use greenwash intentionally. Greenwash is a consequence of ineffective communication, which undermines the often substantial efforts made to improve a company’s environmental performance. Misguided greenwash includes sweeping generalizations, using terms such as natural, eco, or environmentally friendly with no data to back these claims up. With a revised communication strategy, more accurate, data-driven, and focused marketing can be achieved for effective environmental communication.
Category #3: Greenwash Noise
Poor communication, poor environmental value.
These are brands that claim to be green but do not have enough evidence to back these claims up. These are companies trying to shout louder than their competitors about how green they already are. These brands spend more time and money presenting themselves as green relative to the actual time and money spent on making a change and becoming more sustainable. Much work needs to be done to move these brands into the Effective Environmental Communications category. Yet this is possible by:
- Addressing the brand’s environmental impacts through the value chain.
- Developing and implementing an environmental strategy.
- Communicating environmental efforts accurately using a scientific, data-driven approach.
- Achieving third-party certification.
Category #4: Unsubstantiated Greenwash
Effective communication disguises poor environmental value.
These are brands that are involved in positive environmental projects and do provide data to back up their claims. However, this masks damaging environmental impacts.
For instance, a business could be lobbying behind the scenes against the same environmental policies it claims to support. These brands are dancing on thin ice as it’s only a matter of time before their shifty behavior is exposed.
Companies that fall into this category damage the environment the most because this behavior could lead to public disillusionment and disengagement from the environmental debate.
A business guide for Effective Environmental Communication
Stakeholders are becoming increasingly aware of corporate greenwash, meaning there’s mounting pressure on brands to communicate their green efforts accurately. Although we want a stringent critique on green claims, there’s the danger that this critique is scaring organizations to not say anything at all. This phenomenon is termed greenhushing.
The problem with greenhushing is that customers don’t know the sustainability impacts of their choices, industry leaders don’t challenge their peers, and businesses aren’t getting due credit.
What’s needed isn’t silence, but rather information and education. Businesses need to know how to move towards Effective Environmental Communications. It’s for this reason that the GBB has put together this business guide for sustainable marketing. We’ve identified key takeaways from the Federal Trade Commission’s Green Guides and BSR’s Understanding and Preventing Greenwash: A Business Guide Report.
How to avoid greenwashing: Interpretation and substantiation of environmental marketing claims
Marketers must not deceive to influence consumer buying decisions. To determine whether an advertisement is deceptive, marketers must identify all expressed and implied claims and ensure these are supported with sufficient evidence. Gathering sufficient evidence requires tests, analyses, and research. The collection of this evidence needs to be conducted and evaluated objectively, by qualified persons, and generally accepted in the profession as reliable.
The following general principles apply to all environmental marketing claims:
- Qualifications and disclosures: Marketers should use plain language to ensure claims, qualifications, and disclosures are clear, prominent, and understandable. Inconsistent statements need to be avoided, which includes using elements – such as images – to distract from contradictions.
- Distinctions between benefits of product, package, and service: Marketers should be clear as to which aspect of a product or service the environmental claim refers to. If the environmental attribute refers to all but a minor aspect of a product, the claim need not identify that fact. Yet there are exceptions to this rule, that is if the minor attribute significantly reduces the product’s environmental benefits.
- Overstatement of the environmental attribute: Environmental benefits should not be overstated. Benefits should not be exaggerated if they are negligible.
- Comparative claims: Comparative environmental marketing claims should be clear to avoid consumer confusion. Comparison criteria must be explained objectively.
How to avoid greenwashing: Generalized environmental benefit claims
- It’s deceptive to misrepresent directly or by implication that a product, package, or service offers a general environmental benefit.
- Far-reaching environmental claims should be avoided. These are difficult for consumers to interpret and may also suggest an item or service has no negative environmental impacts.
- Clear and prominent language should be used by marketers to limit the claim to a specific benefit or benefits.
- The potential benefits should be assessed using cost-benefit analysis and not be touted as significant if they cannot be shown to be so.
- Even if a product or service has specific and significant environmental benefits that are proven, this is not a qualification for sweeping environmental statements.
How to avoid greenwashing: Communicating carbon offsets
- Competent and reliable scientific accounting methods are needed to properly quantify claimed emission reductions.
- Businesses should not sell a claimed emission reduction more than once.
- The time frame for carbon-offset emission reductions should be included in the claim. That is, carbon offsetting gives emission reductions years beyond when the offsets were made.
- If the emission reductions made were required by law anyway, it’s deceptive to market such reductions for an improved green image.
How to avoid greenwashing: Certifications and seals of approval
A marketer can use the name, logo, or seal of approval from a third-party certifier or endorsement if they meet the required criteria. Credible industry-wide certification bodies include:
- Green Business Bureau
- B Corp
- USDA Organic
- Energy Star
- ISO 14001
- Fair Trade USA Certification
- Green Seal
Despite certification, marketers still need to provide substantiation for the green claims made. Marketers should only use environmental certification or seals that are relevant. And if a certification body offers a general environmental benefit claim, then marketers should qualify this general claim using clear, prominent, and qualifying language. A marketer aims to communicate the specific environmental benefits and limits of the certification provided.
Examples of how specific environmental benefits should be advertised are described below.
- Marketers should not present a product or package as compostable if it’s not.
- To claim an item is compostable, evidence is needed to show that the materials in the item will break down to become usable compost, and do so in a safe and timely manner in the appropriate composting facility (including home composts).
- The details of the compostable nature of a product or service need to be given to avoid deception. The following information should be included:
- Whether the item can be composted safely and promptly in a home compost pile or device.
- Compostable facilities should be available where the item is sold.
- If the item breaks down into non-environmentally-friendly products, this should be stated.
- It’s deceptive to disguise the degree of degradability of a product by using poorly understood technical terms such as; oxo-degradable, oxo-biodegradable, or photodegradable.
- To make degradable claims, a marketer needs competent and reliable scientific evidence that the entire item will completely break down and return to nature within a reasonable time frame.
- It’s deceptive to make degradable claims if the items do not completely decompose in a solid waste stream within a year. Plus items that are disposed of in landfills, incinerators, and recycling facilities for decomposition cannot be classed as degradable.
- Degradable claims need to be qualified clearly, this includes:
- Including the degradability of packaging.
- The extent of degradation that can occur naturally, within one year.
To claim a product, package or service is free from or does not contain the use of a substance, evidence is needed to back up these claims. For example, marketers must:
- Provide evidence that the product, package, or service does not contain the substance, or contains an acknowledged trace amount (background level) of the substance.
- Provide evidence that the product does not contain or use a substitute that is just as environmentally damaging as the original.
Non-toxic claims should not be subject to misinterpretation by the public and marketers should provide evidence to support the claims made. This means scientific evidence that the product, package, or service is neither harmful to humans nor the environment. Marketers should clearly and prominently qualify the claims to avoid deception.
- A product or package should not be marketed as recyclable unless it can be collected, separated, or otherwise recovered from the waste stream using an established recycling program for material reuse.
- To make recyclable claims, marketers must take into account the availability of recycling plants.
- Marketers can make unqualified recycling claims when there are recycling facilities available to at least 60% of consumers in the area where the item is sold.
- If recycling facilities are below this 60%, marketers should state the recyclability of the item is facility-dependent. The lower the level of access, the more important it is for the marketer to emphasize the limited recyclability of a product.
- If only a limited portion of the product or package of service is recyclable, the marketer should communicate this and not make unqualified claims that the entirety is recyclable.
- If an attribute of the product or package – such as the size and shape – makes it so it cannot be recycled, then marketers should acknowledge this fact and not claim otherwise.
Recycled content claims
- Recycled content includes recycled raw materials, as well as used, reconditioned, and re-manufactured components. Marketers can only state a product contains recycled content if it’s composed of material that has been recovered, or otherwise diverted away from the waste stream. This includes during the manufacturing process (pre-consumer) or after consumer use (post-consumer).
- The percentage, by weight, of the recycled content in the finished product or package needs to be given.
To make a refillable claim, the marketer needs to provide the means for refilling the package. This could include:
- A system for the collection and refill of the package.
- Selling a product that consumers can purchase to refill the original package.
Renewable energy claims
- It’s deceptive to represent directly or by implication that a product or package is made from renewable energy if fossil fuels, or electricity derived from fossil fuels, are used in the manufacturing process for any part of the advertised item – unless the marketer has matched non-renewable energy use with renewable energy certificates (a form of fossil fuel offsetting where firms using renewable energy sell their unrealized fossil fuel ‘allowance’).
- To minimize the risk of deception, marketers can specify the source of renewable energy (wind, sun, wave, etc).
- Marketers should not make the claim “made with renewable energy” unless all, or virtually all, of the manufacturing processes are powered using renewable energy. If this is not the case, marketers should state the percentage of the product or package that’s powered by renewable energy.
- If a business generates renewable energy but sells renewable energy certificates for all of that electricity, it cannot then market itself as using that same renewable energy.
Renewable material claims
- Marketers should identify the materials used in a product or package which qualify as renewable materials.
- To use the claim “made with renewable materials” the product or package must be made entirely with renewable materials.
Source reduction (waste prevention at source) claims
- To make credible source reduction claims, a company should accurately depict how it is designing damaging waste out of its processes and also state its comparison criteria.
How to avoid greenwashing: The key is transparency
At Green Business Bureau, we want to help brands provide stakeholders with the transparency they deserve. GBB’s EcoAssemment and EcoPlanner give an online assessment of a brand’s current sustainable initiatives and goals. This digital sustainability reporting capability creates a community for stakeholder collaboration, to avoid greenwashing and drive sustainable development.
Ultimately greenwash is a barrier to developing a sustainable economy and can slow down the progression by creating stakeholder skepticism over environmental initiatives. For instance, greenwash impedes consumer understanding of the impacts of their purchasing decisions as it becomes difficult for them to differentiate between valid and invalid claims. The energy and resources used to fight corporate greenwash should be used instead to create positive environmental impacts.
About the Author
With a Biology degree from Imperial College London and further studies at Imperial College’s Business School, Jane Courtnell has an enthusiasm for science communication and how biology can be used to solve business issues, such as employee wellbeing, culture, and business sustainability.