“Greenwashing involves companies either misleading consumers about the green credentials of a product or service, or misleading consumers about the environmental performance of a company as a whole.” – Dr. Aoife Brophy, Research Lecturer at the Smith School of Enterprise and the Environment at the University of Oxford
In 2020, the European Commission ran an extensive cross-sector sweep of websites to identify instances of greenwash. They found that in 42% of cases, green claims were exaggerated, false, or deceptive.
Greenwashing is rife. It’s used to gain a financial advantage that’s often short lived and can expose businesses to long-term financial risk. As business leaders and employees, we must understand the nature of corporate greenwash. Yet, distinguishing greenwash from the advertisement of genuine green credentials is often difficult.
In this Green Business Bureau article, we define corporate greenwash. We explain why it’s intentionally used and how this is risky business. We will then reveal the seven sins of corporate greenwash. By knowing these seven sins you’ll be able to identify greenwash and prevent its use.
Click on the links below to navigate through this article:
- What is corporate greenwash?
- Why is greenwashing a problem?
- Seven sins of greenwashing (plus greenwashing examples)
What is corporate greenwash?
Corporate greenwash is the exaggeration of a companies financial performance, either done intentionally as a marketing tactic, or unintentionally via ineffective communicaton. Organizations guilty of greenwash will pump more money and time into promoting themselves as environmentally friendly, relative to the actual time and money spent on minimizing their environmental impact.
Why do businesses intentionally use corporate greenwash?
Greenwash is used intentionally when a company wants to be seen as green. Environmentalism is adopted as a unique selling point that appeals to the ecologically conscious consumer. The problem is, the efforts a company makes to be more environmentally friendly are negligible compared to the efforts made to be seen as such. This flaunting of environmentalism began in the 1960s, an era when the sustainability movement started to gain momentum.
For instance, the 60s saw the publication of Rachel Carson’s Silent Spring. Carson’s work marks the origin of the Environmental Protection Agency (EPA), and an increased environmental awareness among society.
This rise of environmentalism gave a new type of consumer – the green consumer – and new opportunities could be found for businesses. Yet, rather than meet the demands of environmentalism, many corporations chose to hide dirty operations under a green sheen, using deceit to pander to the ethical consumer.
Since the 60s there’s been a global rise in concern for the environment. For instance, four waves of surveys, from 2014 to 2019 by Glocalities, compiled the answers from 189,996 respondents. These studies revealed global populations are united by environmentalism. In 2014, 71% of respondents were worried about the damage humans had caused to our planet. In 2019, this figure rose to 77%.
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Another study named The Global Sustainability Study 2021, by Simon-Kucher and Partners, revealed a significant global paradigm shift in how consumers view sustainability. The study reported 85% of consumers are greener in their purchasing behavior. Plus, many of these consumers are willing to pay more for sustainable alternatives. Greenwashing capitalizes on this ethical consumer.
Yet, these are short-term financial gains. Greenwashing is risky business, and is frowned upon by investors, consumers, and regulators.
Why is greenwashing a problem?
“As the number of ESG and climate-themed funds has exploded in recent years, so too have concerns among investors and regulators about greenwashing and transparency.” – Daan Van Acker, Senior Analyst at InfluenceMap.
Greenwashing is more than a question of ethics. Regardless of what a business says, and how it wants to present itself, an unsustainable business is ultimately at risk of failure. Such businesses are exposed to the financial risks a sustainable business model works to mitigate.
By ignoring the environmental impact of business operations, companies could pay hefty regulatory fines and settlements, while simultaneously tarnishing their brand reputation.
BP’s 2010 Deepwater Horizon Disaster illustrates this point. Following the oil spill, BP’s stock price plummeted ~50% over two months. Estimates suggest the company’s clean-up costs alone were ~$90 billion. To this day, BP has still not recovered in value and has been branded a dirty oil company soiled in shame.
In addition to these financial risks, greenwashing can also harm businesses by:
- Exposing employees and consumers to toxic, dangerous, and environmentally damaging products by not investing in the appropriate health and safety measures as a true sustainable business would.
- Legal conviction by The Federal Trade Commission (FTC). The FTC has produced strict guidelines called Green Guides to address misleading claims.
- A tarnished brand reputation and negative consumer perspectives.
- Posing an investment risk. Investors are more aware of greenwashing and better able to avoid guilty companies.
New regulations could make greenwashing more difficult. For instance, the European Commission is set to introduce rules that will police green marketing on consumer-protection grounds, as part of its 2020 Circular Economy Action Plan.
Authorities are also beginning to take a closer look at greenwashing in finance, by ensuring the brands portraying themselves as sustainable, are exactly that.
Yet, sometimes a company is guilty of greenwash without knowing it. It can be easy to fall into common marketing traps that unintentionally cause a consumer to view a brand to be more sustainable than it is.
To address this, a TerraChoice report titled The Sins of Greenwashing: Home and Family Edition identified seven sins of corporate greenwash. Through education we can understand these common marketing traps. And with this understanding, companies are better placed to avoid greenwash tactics.
Seven sins of greenwashing (plus greenwashing examples)
As business leaders, these seven greenwash sins act as a guide to avoid common greenwash traps.
Sin #1: The Sin of the Hidden Trade-Off
The sin of the hidden trade-off describes a situation where an environmental issue is seemingly solved, but this solution contributes to another concerning issue.
An example of this is provided by the McDonald’s paper straw scandal back in 2019. McDonald’s addressed the environmental issue of plastic pollution by replacing their straws with paper alternatives. However, these new straws weren’t recyclable, whereas the plastic straws were. McDonald’s straws were still contributing to our waste problem. A small reduction in plastic consumption (although a step in the right-direction) should not be applauded as a completely sustainable move without addressing the challenge of waste reduction. Doing so would make McDonald’s guilty of the hidden trade-off sin.
“For too long the debate has been stuck on recycling and how to deal with waste once it is created. We should be thinking about how to avoid waste creation. Lips have been a waste-free alternative to straws for millions of years.” – Julian Kirby, Friends of the Earth
Sin #2: The Sin of No Proof
The sin of no proof describes environmental claims that are not backed by factual evidence or third-party certification. An example would be claiming that a certain percentage of a product comes from consumer-recycled content, without providing supportive factual data or details.
We can find another example of the sin of no proof from the TerraChoice report. The report focuses on bisphenol A (BPA), which is an industrial chemical found in baby bottles and polycarbonate plastics. The report urged companies to provide proof of BPA-free claims, yet no proof was given.
Sin #3: The Sin of Vagueness
The sin of vagueness describes environmental claims that lack specificity and so are deemed meaningless. This sin is committed when using words such as green, sustainable, and eco, without specific explanations to justify their use. Term overuse and the absence of clear-set criteria has led to the dilution of such terms, rendering them meaningless and interchangeable. This detracts from the public’s understanding of environmental issues.
For example, let’s look at the term sustainability. All of a sudden sustainability is about climate change, ending poverty, and gender equality. Can companies employing strategies focusing on just one or two of these areas market themselves as sustainable?
To answer that question, let’s refer to the rules of sustainability. Sustainability means taking only what you need and leaving systems capable of continued existence.
Next, let’s consider the company Patagonia as an example. Patagonia is considered worthy of its sustainable brand reputation, winning the 2019 UN Champions of the Earth award. Yet is there enough evidence for Patagonia to brand itself as truly sustainable?
According to Paul Hawkin, author of Ecology of Commerce, despite their commendable efforts, Patagonia does not leave systems capable of continued existence. According to Hawkins, there’s not sufficient evidence for Patagonia to brand itself as completely sustainable without committing the sin of vagueness. Commendably, Patagonia does recognize the flaws in its efforts to become truly sustainable.
Sin #4: The Sin of Worshipping False Labels
The sin of worshipping false labels describes the creation of false certifications or labels to mislead consumers. Fake certifications mislead consumers into believing a product or service went through a legitimate green screening process.
The problem with this fraudulent certification is well-known in the maritime industry. In 2001, the International Maritime Organization (IMO) detected 12,635 cases of certification forgery. While this figure is shocking enough, there’s no way of knowing how many cases have gone undetected.
Below we’ve provided our list of reliable green business certification labels to help you avoid the sin of worshipping false labels:
- USDA Organic
- Green Business Bureau
- Energy Star
- ISO 14001
- Fair Trade USA Certification
- Green Seal
Check out this EcoLabel Index for a comprehensive list of reliable green certifications.
Sin #5: The Sin of Irrelevance
The sin of irrelevance describes products and services that advertise an obvious environmental feature that simply doesn’t matter. They don’t matter because they don’t represent a strategic business shift, cultural change, or change of core values to operate in a more environmentally friendly way.
A good example is CFC-free products. CFCs have been banned for over 30 years, but you still see products advertising themselves as CFC-free in an attempt to appear environmentally friendly. This may seem harmless, but the sin of irrelevance creates the impression that the product is better for the environment than a competitor, when in fact, they are the same.
Sin #6: The Sin of Lesser of Two Evils
The sin of lesser of two evils states the environmental benefits of a product or service that have no environmental benefits to begin with. Creating any product and delivering any service uses natural resources and energy, but some industries are more harmful than others.
Companies will develop more sustainable alternatives, but marketing these alternatives as “good for the environment” is misleading.
Burger King committed the sin of lesser two evils in July 2020, with their advertised “reduced methane beef”. The commercial explained that by changing a cow’s diet, Burger King was able to reduce their methane emissions by 33%. While this seems to be improvement, critics have pointed out that the overall emission savings were negligible in an environmentally damaging industry.
Sin #7: The Sin of Fibbing
The sin of fibbing describes environmental claims that are blatantly false. A hypothetical example would be saying that a diesel car causes zero carbon dioxide emissions.
To exemplify the sin of fibbing we’ll use Shell’s Tar Sands project initiated back in 2008. To rally support for the project, Shell spun out an advertisement campaign headlined “we invest today’s profits in tomorrow’s solutions”.
The Oil Sands project exploits Northern Canada’s tar sands which stretch over 140,000 square kilometers of Alberta. The sands are strip-mined from vast open pits to obtain oil that ultimately releases eight times more emissions than conventional oil.
Is this really tomorrow’s solution?
If we consider COP26’s net-zero GHG emission goals for 2030, this statement could be seen as a blatant lie.
Business transparency is a key greenwash antidote
Transparency creates open and clear advertising by preventing exaggeration, and providing evidence for green claims. Transparency across a company’s entire supply chain, using data collection and monitoring frameworks, makes stakeholders aware of sustainability problems. This creates an open dialogue for collaboration on sustainability, and helps create better businesses.
At Green Business Bureau, we know transparency is vital for continued sustainable development. GBB’s online EcoAssemment and EcoPlanner provide transparency to help businesses understand, prioritize, implement and certify green initiatives.
GBB offers digital sustainability reporting to increase transparency, promote standardization, and avoid corporate greenwash. With openness and honesty, it’s possible to create communities for stakeholder collaboration, meaning we all can work to solve the problem of unsustainability in business.
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.