What is greenwashing?
Greenwashing is a misleading marketing practice that creates a wrong impression on consumers regarding the environmental engagement of a supposedly green company or a product or service.
A global review of randomly selected websites in 2021 has found that 40% of the examined websites used tactics that could be misleading consumers regarding their green claims made online. These include, for example, unclear or vague claims and language without sufficient explanation or evidence, and hiding or omitting certain information, such as product's pollution levels, in order to make a more climate-friendly impression.
Greenwashing Example
The Alliance to End Plastic Waste (AEPW) – a Singapore-based nonprofit backed by big oil and chemical companies such as Shell, ExxonMobil, and Dow – claims to be spending $1.5 billion to clean up plastic waste in developing countries. However, not only did AEPW fail to keep its promise to clean up the Ganges River in India, but its member organizations came up with plans to produce even more plastic.
Unintentional greenwashing
Companies can conduct greenwashing even with good intentions, so marketeers must be very careful when making environmental claims. You can't simply put an eco-label on the package; sustainability should be about transparency.
Unintentional greenwashing can originate from issues in any part of a company's value chain, but it often emerges in the supply chain. For example, a vendor can falsely pretend to be using sustainable production methods or have green certification. Creating transparency throughout an organization's entire supply chain through data collection and monitoring raises awareness of sustainability concerns among stakeholders and enables them to identify areas for potential improvement.
Transparency is the best method to avoid greenwashing
The findings of a 2019 study show that a product associated with greenwashing "loses the aspects of loyalty, satisfaction, and benefits, as well as becoming a product that causes confusion of consumption." If a company's greenwashing practices become public, this can significantly harm its reputation.
Finding the right way of communicating the sustainability of a product or service can be a challenge. Transparency plays the key role here: it provides evidence for environmentally friendly products and company characteristics and avoids omitting or exaggerating specific facts. Transparency can thus become a significant competitive advantage, as it allows for credible validation and the ability to differentiate from products falsely marketed as green.
In the UK, the so-called Green Claims Code provides a set of rules to guarantee that any environmental claims on goods and services are not misleading customers and can be substantiated. The rules are the following:
- Claims must be truthful and accurate.
- Claims must be clear and unambiguous.
- Claims must not omit or hide important, relevant information.
- Comparisons must be fair and meaningful.
- Claims must consider the complete life cycle of the product or service.
- Claims must be substantiated.
Example of successful implementation of transparency
The International Association for Soaps, Detergents and Maintenance Products (A.I.S.E), has developed and implemented a Charter for Sustainable Cleaning, allowing manufacturers to compare their relative strengths and weaknesses to an industry average. This framework provides transparency for an industry as a whole, in which all companies can benefit from becoming more environmentally conscious.
Transparency is required to overcome skepticism
Sustainable products are more in demand than ever and thus represent a valuable competitive advantage for companies with high-profit potential. Consequently, the greenwashing of environmental claims might seem quite tempting for companies. Unfortunately, this has led consumers to develop a lack of trust in "green" products, and many consumers have lost the belief in company claims about their sustainability practices. According to a GreenPrint survey, more than half (53%) of American consumers "sometimes" or "never" believe companies' environmental claims.
Therefore, transparency is essential for companies to build and maintain trust in their sustainability commitments. Ensure your company isn't damaging customers' trust by greenwashing – making false claims that your company or products are environmentally friendly.
Do's and Don'ts to avoid greenwashing as a result of a lack of transparency
Do's
- Provide information that validates your environmental claims, for instance, by providing easily accessible links and sources to verified data.
- Ask externals to check the information that validates your claims to ensure your message is clear and hasn't changed from person to person.
- Include Scope 3 emissions in your sustainability reporting, containing sustainability-related information from your external suppliers.
Don'ts
- Use generic words, such as organic, eco-friendly, recyclable, natural, etc., if you can't verify that they are features of your product.
- Use generic marketing labels or phrases, such as eco, green, or branding images that give a green impression, etc., that aren't supported with evidence.
- Communicate environmental ambition without having a strategy that outlines precisely how you can achieve, measure, and report on these claims.
Transparency is essential for companies to build and maintain trust in their sustainability commitments. Ensure your company isn't damaging customers' trust by greenwashing – making false claims that your company or products are environmentally friendly.