In this Green Business Bureau article, we answer the question what is greenwashing? Our aim is to help organizations take proactive action and avoid corporate greenwash. We then detail the five signs of greenwashing as a practical guide for accurate sustainable marketing, working in alignment with the 7 greenwashing sins.
According to an Edelman’s Trust Barometer Special Report, a mere 34% of consumers trust the brands they purchase from. And to compound this concern, the same report indicates 81% of consumers state a lack of trust could be a deal-breaker in their purchasing decisions. This distrusting business environment is the result of inaccurate and shifty marketing tactics like greenwashing. We want to help business owners identify such marketing messages in their branding, to rebuild customer connection, commitment, and confidence.
Click on the links below to navigate through this article and jump to the relevant section.
- What is greenwashing?
- The rise of corporate greenwash has created a distrusting market
- The troubling evolution of corporate greenwash
- The seven sins of greenwashing
- How to spot greenwashing: The 5 signs of corporate greenwash
- Greenwashing examples
- A marketers guide for transparent environmental communications
- Our resource library for accurate sustainability marketing
What is greenwashing?
Greenwashing is the exaggeration of a company’s environmental credentials. That is, marketing communications impress business operations to be better for the environment than they are in reality. Corporate greenwash is used intentionally or unintentionally and varies in severity, which presents 3 different types of corporate greenwash, as defined by the Business for Social Responsibility (BSR). We explain these greenwashing types below.
Category #1: Effective environmental communications
Effective communication and good environmental value
Sustainability is built into a business’s strategy and core mission statement. Every organizational process and operation is considered, challenged, and improved to reduce an entity’s environmental and social impact. Efforts and successes are then communicated accurately using an evidence-based approach to back claims made. These brands operate as green leaders.
Category #2: Misguided greenwash
Poor communication, some environmental value
In this instance, corporate greenwash is not used intentionally but is rather the result of ineffective communication that undermines the substantial efforts made to improve a company’s environmental performance. Most often, misguided greenwash includes the use of sweeping generalizations, using terms such as natural, eco, or environmentally friendly with the absence of data to back these statements up. A revised communication strategy is needed here to deliver data-driven and focused marketing messages.
Category #3: Greenwash noise
Poor communication, poor environmental value
These are companies who try 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, but this is possible by:
- Addressing the brand’s environmental impact through the value chain.
- Developing and implementing an effective 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 brands are involved in positive environmental projects and provide data to back up their claims. However, these claims mask a company’s damaging environmental impacts. Brands that fall into this category cause the most harm to the environment because their behavior could lead to public disillusionment and disengagement from the environmental debate.
For more information on the different types of corporate greenwash, read: How To Avoid Greenwashing: A Businesses Guide for Sustainable Marketing.
The rise of corporate greenwash has created a distrusting market
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.
In addition, a 2022 survey conducted by The Harris Poll for Google Cloud, spoke to 1,419 C-suite and VP-level executives at global corporations. The survey asked how their employers and competitors are addressing environmental issues. Of the respondents, 58% admitted their own company has engaged in corporate greenwash, with that number jumping to 72% for companies based in North America.
This prevalence of corporate greenwash is creating distrust in the business environment. For instance, a 2022 Advanced Trends Report found 43% of employees, when questioned, thought their company was guilty of greenwashing. In addition, according to a 2019 Edelman’s Trust Barometer Special Report, a mere 34% of consumers trust the brands they purchase from.
As consumers and employees, we don’t want to be deceived. Neither do we want to be guilty of deception. For this reason, we must understand how to spot corporate greenwash, which you can do by using the 5 greenwashing signs presented later in this article.
The troubling evolution of corporate greenwash
It wasn’t until the 1960s that the environmental movement began to gain momentum. NGOs were established to oversee the environmental effects of third-party operations. Greener products and services then slowly started to gain traction because of consumer demand.
Businesses found themselves in a popularity contest over how sustainable their operations were, and this popularity prompted organizations to create a new green image through advertising. Jerry Mander, a former Madison Avenue advertising executive, named this new form of advertising ecopornography.
Greenwashing wasn’t yet widely recognized. This meant companies got away with misleading claims due to a lack of regulation. Businesses could reap the benefits of a perceived philanthropic reputation without putting in the real work to be environmentally sustainable. Through short-term wins, greenwashing became ubiquitous.
Probably the most famous greenwashing campaign in history was Chevron’s “People Do” campaign, launched in 1985. Advertisements show Chevron employees protecting bears, butterflies, and sea turtles. Yet, most of the environmental programs promoted in the campaign were mandatory anyway, and others were insignificant and inexpensive when compared to the costs of advertising them.
For instance, Chevron’s butterfly preserve movement cost the company $5,000 per year – a pin-prick relative to the millions spent to promote the cause. Once more, during the campaign’s launch, Chevron continued to violate the clean air act and spilled oil into wildlife refuges.
Putting a name to misleading green claims
A year after the Chevron campaign, the term corporate greenwash was coined by Jay Westerveld, an American environmentalist.
On Westerveld’s visit to a Beachcomber island resort, he was appalled by the resort’s “help us save the environment, please re-use the towels” campaign. Does this seem like an innocent statement? Who could argue that reusing towels isn’t good for the environment? So why was this a cause of concern for Westerveld?
As Westerveld noted, this campaign distracted attention from the resort’s plan to expand into fragile coral reef habitats. That is, the resort presented itself as environmentally conscious when the core business efforts were environmentally crippling.
Following this, a 1991 study by the Journal of Public Policy and Marketing reported 58% of environmental ads had at least one deceptive claim.
To curb business appetite for this unhealthy greenery, in 1998 the U.S. Federal Trade Commission (FTC) created the Green Guides. These guides define what terms should be used for accurate and transparent environmental marketing. The aim was to create a common language and standardization. Today the FTC supports these green guides through enforcement action and penalties for companies caught using misleading environmental claims. Later in this article, you’ll learn how to follow the standards laid out in this guide via our business guide for effective environmental communication.
As you can see, over the years there’s been heightened public awareness around corporate greenwash with increasing measures to curb it. However, the question remains over whether corporate greenwash is still trending today.
Is greenwashing still trending today?
U.S. consumers are estimated to spend $150 billion on products marketed as sustainable by 2021. This figure demonstrates consumer willingness to pay a premium for such goods and unfortunately, some companies are still using greenwash tactics to capitalize on this trend.
In 2010, a TerraChoice report found that 95% of green products were marketed via false green claims. In a more recent 2021 study, the European Commission (and other national authorities) ran an extensive cross-sector sweep of websites to identify instances of greenwash. Their findings reveal that greenwashing remains a prevalent problem:
- In 42% of cases, green claims were exaggerated, false, or deceptive. In 37% of cases, green claims included vague and general statements, using words such as eco-friendly and sustainable with little substantiation.
- In 59% of cases, there was no easily accessible evidence to support the green claim.
- In more than 50% of cases, the company could not provide sufficient information for consumers to assess the accuracy of the green claim made.
The negative consequences of corporate greenwash
When used intentionally, greenwashing is unethical – the conscious consumer is manipulated and deceived for corporate gain. Yet, corporate greenwash presents more than a question of ethics, as we explain in the following article: The Seven Sins of Greenwashing:
“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 as a dirty oil company soiled in shame.
In addition to these financial risks, greenwashing can also harm a business by:
- Exposing employees and consumers to toxic, dangerous, and environmentally damaging products due to a lack of investment in the appropriate health and safety measures, unlike a business committed to sustainability.
- Causing the business to face legal conviction by The Federal Trade Commission (FTC) – following the FTC’s Green Guides to address misleading claims.
- Tarnishing a brand’s reputation causing negative consumer perspectives.
- Posing an investment risk. Investors are more aware of greenwashing and are better able to avoid guilty companies.
New regulations are set to make greenwashing more difficult. The European Commission aims 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. – Jane Courtnell, The Seven Sins of Greenwashing
In addition to these negative consequences from a business standpoint, corporate greenwash carries a more sinister side which is apparent in the bigger picture…
That is, greenwashing stifles progression toward true business sustainability. For instance, greenwashing diminishes consumer power which could otherwise create an environment where corporations compete on a sustainability level (being environmentally and socially responsible), as opposed to just an economic level. That is, greenwashing means the sustainable business is championed alongside unsustainable entities – greenwashing is the cheat card in this business game. Yet, this cheat card constricts collaboration due to a lack of transparency. This hampers sustainable progression, which in turn, threatens stability on Earth. Our article Why Is Sustainability Important In Business? explains the importance of business sustainability for environmental and social stability.
The seven sins of greenwashing
The seven sins of corporate greenwash showcase common greenwashing traps. We’ve detailed and explained these sins below:
- The sin of hidden trade-off: An environmental issue is seemingly solved, but this solution contributes to another concerning issue. For instance, paper is not necessarily environmentally preferable as the production process damages the environment through chemical pollution via chlorine, and the production process carries a high carbon footprint.
- The sin of no proof: Environmental claims are not backed by factual evidence or third-party certification. Claiming to be made from recycled content is meaningless unless there’s evidence available to show this is true.
- The sin of vagueness: Environmental claims lack specificity and so are deemed meaningless with poorly defined and broad claims. An example is to say a product is all-natural. Yet to be natural doesn’t mean the product is good for the environment. Arsenic is natural but is harmful to humans and wildlife.
- The sin of worshipping false labels: False certifications or labels are created to mislead consumers. The impression of third-party endorsement is given where no such endorsement exists.
- The sin of irrelevance: Products and services 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 for the business to operate in a more environmentally friendly way. An example would be a product claiming to be CFC-free when CFCs are banned under the Montreal Protocol.
- The sin of lesser of two evils: Stating the environmental benefits of a product or service that has no environmental benefits to begin with, or distracts from the greater environmental impacts of the category as a whole.
- The sin of fibbing: Describes environmental claims that are blatantly false. For instance, products claiming to be ENERGY STAR certified or registered.
To learn more about the seven sins of greenwashing, read: The Seven Sins of Greenwashing.
It’s all very well knowing the seven sins of greenwashing, but being able to utilize and put this knowledge into action can be much more difficult. To help, using the seven greenwashing sins as guidance, we’ve detailed the five signs of corporate greenwash to guide business leaders and consumers, to help them create accurate marketing messages.
How to spot greenwashing: The 5 signs of corporate greenwash
As business leaders, employees, consumers, and citizens, we must be able to identify greenwashing to avoid making misleading claims ourselves and to change our consumption habits accordingly. Our aim is to support evidence-based sustainable initiatives.
To help you, the Green Business Bureau has listed five signs of corporate greenwash to look out for. Use this list as your actionable guide to spot and stop greenwashing.
Sign #1: Vague terms and slogans
Sustainable, eco-friendly, natural, and green – these are common terms used in marketing to appeal to the eco-conscious consumer. But what do they mean?
The unsubstantiated overuse of these terms has meant they’ve become increasingly vague and interchangeable; this phenomenon is known as term dilution.
Let’s take the term sustainable as an example to explain. If you read our previous post ESG and Sustainability: Your 101 Guide for Understanding Corporate Sustainability you’ll understand that the very term sustainable has fallen victim to term dilution. All of a sudden sustainability is about climate change, ending poverty, and gender equality. Can companies that employ strategies focusing on just one or two of these areas market themselves as sustainable?
Natural is another vague term that’s become essentially meaningless. There are natural ingredients that are bad for us and our environment. For instance, the pesticide arsenic is natural but you wouldn’t want it in your coffee. This pesticide was sprayed over U.S. towns in the 60s, killing wildlife and poisoning humans. By sticking “natural” to food packaging, the agricultural industry could hide these sinister practices.
Don’t be fooled by companies saying the right thing. Look for the evidence to support their claim and question what these vague terms actually mean for each brand
Sign #2: Using natural imagery
Just as companies can easily say the right thing, they can also easily show you the right thing. Trees, butterflies, bunnies, blue skies, and a farmer’s tractor – these are seductive images used to portray an eco-friendly business. Another common deceitful trick is using earth colors, such as blues, greens, and browns.
Like with the use of vague terms and slogans, you need to look for evidence. Does the imagery used help businesses communicate their sustainable initiatives, or is it just surface-level aesthetics?
Sign #3: A Lack of transparency and proof
Check the label, product description, or website for information about the brand’s environmental impact and what initiatives they’re involved in. A company that’s genuinely working hard to minimize its environmental impact will tell you. If there’s no disclosed information or a lack of information, steer clear of that brand.
- Green Business Bureau
- B Corp
- USDA Organic
- Energy Star
- ISO 14001
- Fair Trade USA Certification
- Green Seal
Check out this EcoLabel Index for a comprehensive list of reliable green certifications.
Third-party certification providers value transparency. For instance, at the Green Business Bureau, a company’s sustainability performance is measured using an EcoAssessment. From here, companies are awarded an EcoScore for ultimate transparency. This EcoScore is communicated using the labels: Member, Bronze, Silver, Gold, or Platinum. These labels remove ambiguity and provide a visual representation for key stakeholders to understand a company’s environmental performance. With GBB certification, there’s no hiding place for sketchy green credentials – businesses that sign up are committed to becoming more environmentally friendly.
Sign #4: Irrelevance and simplicity
Not all environmental claims are relevant. 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. This may seem harmless, but it creates the impression that the product is better for the environment than a competitor, when in fact, they are the same. Here the green claims made are irrelevant.
On this note, companies can get tunnel vision targeting one environmental problem without seeing the big picture and over-simplifying what it means to be sustainable.
Let’s come back to the example just mentioned. Great, our product is CFC-free, but what about how it’s made, packaged, and transported? What are the company’s overall GHG emissions? How much waste does the company produce? What about the other chemicals used in production?
Sustainability is complex and businesses cannot solve this by focusing on a single initiative. Companies need to take a holistic approach to the problem of unsustainability. Organizations need to consider their constituent parts, how these interrelate over time, and how they interact with other systems and our environment.
Sign #5: A lack of modesty
As mentioned, the problem of unsustainability is complex, and solutions require a system-thinking approach. True business sustainability is a problem that hasn’t been solved yet, as we explain.
Coming back to the rules of sustainability, sustainability means taking only what you need and leaving systems capable of continued existence.
Let’s consider the outdoor clothing brand Patagonia as an example. Patagonia is considered worthy of its sustainable reputation, winning the 2019 UN Champions of the Earth award, and operating as a certified B-Corp. Yet, even Patagonia hasn’t solved the problem of unsustainability in business.
According to Paul Hawkin, author of Ecology of Commerce, despite their commendable efforts, Patagonia does not leave environmental systems capable of continued existence. As Hawkins states, if every company operated as Patagonia does, we’d still be experiencing the environmental issues we have today. Modestly, Patagonia highlights the imperfections in their drive to become truly sustainable.
In summary, no business should place itself on a pedestal when it comes to sustainable design. Brands must be humbled to address the challenges they face on their journey to become a truly sustainable business. When true business sustainability is achieved, we’ll hear about it as it will be a monumental moment in the evolution of business.[/vc_row]
Greenwashing examplesBelow we illustrate how the five signs of corporate greenwash can be used in real life to identify instances of greenwashing.
Greenwash example #1: Ikea
A 2020 investigation by Earthsight found Ikea had been making Beachwood chairs using illegally sourced wood from the forests of Ukraine’s Carpathian region. This area is home to endangered bears, lynxes, wolves, and bison. What was most shocking about this case is that the illegal timber was certified by the Forest Stewardship Council (FSC). This raises questions about the transparency and ethics of the FSC federation too.
Sign #3: Ikea flaunted its sustainability credentials, and the FSC – considered a gold standard of forest accreditation – approved. In this example, both institutions are guilty of greenwashing. The lack of transparency and proof regarding how the wood had been sourced was a clear sign of this greenwash. In addition, a cautious appraisal of the certification stamp is needed.
Greenwash example #2: H&M
H&M markets their Conscious Collection for the environmentally aware consumer. Yet, a 2021 report by the Changing Markets Foundation investigated this major high-street fashion brand to check the truthfulness of their sustainability claims. The report found 96% of H&M’s claims were misleading. The claims made were vague, which is a common greenwash sign as we know. What does a conscious collection mean?
“H&M’s Conscious Collection actually contains a higher percentage of synthetics than its main collection, standing at 72% versus 61% respectively. Similarly, 57% of the garments in the Conscious Collection use polyester, in contrast to 52% of the H&M main collection.” – Changing Markets, Synthetics Anonymous ‘Fashion brands’ addiction to fossil fuels
Greenwash Example #3: Shell
In 2020, Shell was called out for gaslighting the general public. Shell used Twitter to ask consumers if they were “willing to change to help reduce emissions?” The poll only attracted 199 responses but then went viral. Shell received a wave of vitriol with high-profile people such as Alexandre Ocasio-Cortez and Greta Thunberg calling the company out. Shell continues to be responsible for ~1% of global carbon dioxide emissions from its activities every year.
Sign #5: Here we see a lack of modesty. Shell puts the onus on the consumer which seems to distract them from their own environmentally harmful activities. In this campaign, Shell does not raise its hand and address its unsustainable practices.
A marketers guide for transparent environmental communications
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.
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.
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.
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.
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.
Despite certification, marketers still need to provide substantiation for the green claims made. Marketers should only use environmental certifications or seals that are relevant.
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.
For a more detailed guide that outlines how specific environmental benefits should be advertised, read: How To Avoid Greenwashing: A Businesses Guide for Sustainable Marketing.
Our resource library for accurate sustainability marketing
The Green Business Bureau has several article resources to help business leaders, green teams, and employees avoid greenwashing by accurately communicating the green credentials of business operations. In addition, these resources will also help you as a consumer spot corporate greenwash, to exercise your consumer power to support companies making real sustainable change. We’ve listed these resources below, simply click on the links provided to be directed to the article of choice.
- How To Avoid Greenwashing: A Businesses Guide for Sustainable Marketing
- The Seven Sins of Greenwashing
- How To Avoid Greenwashing: A Businesses Guide for Sustainable Marketing
- Sustainability Marketing: How to Authentically Convey your Company’s Green Commitments and Avoid Greenwashing
- Promoting Your Green Business Without Greenwashing
- Sustainability Marketing: How To Reach Three Kinds of Customers Of Green Products and Services
- Green Marketing: Don’t Hide Your Light!
- What Is Sustainable Marketing and Why Is It Important in 2022
- Sustainable Business Marketing: 7 Tactics to Attract Eco-Conscious Customers, Partners and Employees
Transparency and truth support sustainable business advancement
The problem with corporate greenwash is that it takes away stakeholder power – which is vital to create a better, greener future for our children. Corporate greenwash hinders progress by masking unsustainable operations, meaning these operations cannot be addressed with sustainable alternatives.
Creating a truly sustainable business, and solving the complexities of this challenge, requires cross-sector collaboration and coordination from all – business leaders, investors, employees, and consumers. How can this collaboration occur when a true assessment regarding a business’s sustainability credentials is stifled by inaccurate information?
We hope we’ve put corporate greenwash in the spotlight and raised awareness of this issue. You can now use the five signs of greenwash explained in this article to be conscious and proactive stakeholders. Using these signs, you can identify greenwashing and exercise your stakeholder power to spot and stop green lies.