What is Greenwashing?

What is greenwashing?

Greenwashing is the act of making false or misleading statements about a product or practice's environmental benefits. It promotes false solutions to the climate crisis that distract from and delay concrete and credible action. Green products can be sold at a premium, making them more expensive, which can lead consumers to overpay. Greenwashing undermines credible efforts to reduce emissions and address the climate crisis. 

Why do companies do it? 

It can be a way for companies to continue or expand their polluting and related harmful behaviour while gaming the system or profiting from well-intentioned, sustainably-minded consumers. 

Enterprises might engage in voluntary greenwashing for a variety of reasons, including:

1. Appearing compliant with regulations: Enterprises may conceal or misrepresent information about their carbon emissions to avoid regulatory action.  

2. To earn consumer trust: Consumers are increasingly preferring and willing to pay more for sustainable products. Nearly 66% of all respondents (and 75% of millennials) in a Mckinsey survey said they consider sustainability when buying a luxury product.  

3. Misinforming investors about growth: Sustainable investing is growing in popularity, and more and more investors are considering the environmental track record of a business when evaluating its investment potential. 

4. Lack of mandatory requirements: Voluntary initiatives lack the consistency and accountability mechanisms required to create a level playing field for all companies. Moving from voluntary to mandatory climate disclosures is key to addressing greenwashing in a systematic manner. 

5. Lack of regulations: To effectively tackle greenwashing and ensure a level playing field, enterprises must move from voluntary initiatives to regulated requirements for net zero. This lack of regulation can cause enterprises to engage in unintentional greenwashing. As per this UN report, which outlines key steps to avoid greenwashing of net zero targets, regulators should develop regulations and standards starting with high-impact corporate emitters, including private and state-owned enterprises and financial institutions.

Types of greenwashing : 

1. An organization claims credit for using a sustainable method, but in reality, this is to reduce its costs. (For example, a business may eliminate plastic packaging to reduce costs but say it is a green initiative)

2. An organization lies about a product or service’s eco-friendliness through phrases like “best-in-class ecology”, environmental imagery or false or made-up certifications. This is the more extreme form of greenwashing.

How do you look for it? 

Nature-based imagery—such as trees, leaves, or animals—on product packaging and in advertisements can imply sustainability, even if the company or product either actively harms the environment or takes no real steps to protect it. Stereotypical images of nature aim to show environmental friendliness, even when the product is not sustainable. Furthermore, some organisations select research data to highlight sustainable practices while masking harmful ones.

Read beyond the labels - Natural. Eco-friendly. Sustainable. Non-toxic. These words may sway consumers, but they’re vague enough to mean different things to different people and offer no real proof that a product is green.

Pay close attention to certifications - Independent, third-party certifications can be useful markers of sustainability. These stamps of approval, specifically by consumer advocacy or environmental groups, do the vetting for you and measure various environmental indicators, like chemical usage or carbon emissions. 

Written by: Nidhi

05/2024

References

Lindwall, C. (2023, February 9). Learn to spot greenwashing. Natural Resources Defense Council. https://www.nrdc.org/stories/learn-spot-greenwashing​

Terrascope. (n.d.). What is greenwashing? Why should large enterprises care?https://www.terrascope.com/blog/what-is-greenwashing-why-should-large-enterprises-care​