Getting Rid of Greenwashing
Around the world, organizations and brands are under clear pressure to be more sustainable. Shareholders, regulators, customers, employees, and pretty much every stakeholder group are all demanding companies take steps to better understand and reduce their environmental impacts.
Younger consumers in particular are putting a big purchasing emphasis on ‘environmentally fluent’ brands. A 2023 McKinsey study finds 57%+ of millennials will pay more for products from companies committed to sustainability. The majority of millennials and Gen Z consumers also take the time to research the environmental and social impacts of products they purchase and brands they support.
Partly as a result, sustainability and sustainably-marketed products and services are seeing outsized category growth. At the end of the day, sustainability sells. But what type of ‘sustainability’ are consumers buying?
Source: McKinsey
There is, quite obviously, a big difference between a sustainably-marketed product, and a sustainable product. There are a lot of the former, far fewer of the latter.
With all this external pressure to be ‘sustainable’ and cater to environmentally conscious consumers, organizations are taking two, fairly divergent paths:
In the first group, we have authentic, sustainable brands. These are companies that understand and recognize the business benefits for sustainability, and are genuinely investing the time and effort into sustainability implementation, sustainable product development and R&D, responsible sourcing, and other holistic sustainability practices. These companies are playing the long game.
The second group, by comparison, are typically chasing short-term, easy wins. These organizations see sustainability more in terms of optics and messaging, using communication tactics to present sustainability in terms of brand attributes, rather than tangible, physical attributes and operational steps.
When this second group talks about its sustainability, more often than not, it’s “greenwashing.”
Overall, greenwashing is a fairly pervasive and widespread practice. Yet, at the same time, more and more regulatory developments and actions are suggesting the clock is running out on many greenwashers — and the real negative consequences are manifesting quickly.
What Is Greenwashing?
Greenwashing occurs when organizations make sustainable claims that include incomplete, misleading, or false information about their products’, services’, or company’s environmental impact(s). It’s particularly common in consumer industries like food and beverage, fashion, cosmetics, household products, and electronics.
Why is Greenwashing so Harmful?
Overall, Greenwashing carries negatives for consumers, companies, and — in particular — the environment.
Consumers:
Greenwashing makes it harder for consumers to know which products or services are actually sustainable. They may even believe their purchases are sustainable when they’re really not — and, in fact, 57% of consumers admit they have a hard time understanding if the products they buy are actually sustainable, according to research from Kantar.
Greenwashed marketing and PR tactics often mislead consumers, undermining trust not only in brands, but sustainability overall. That said, there might at least be one silver-lining to greenwashing: by advertising sustainability (even an inauthentic form), a brand is still ultimately advertising sustainability. As consumers move from ‘generally aware’ to ‘informed and educated’ about sustainability, these reminders keep sustainability top-of-mind, and are easier to poke holes in or call BS on.
Companies:
Greenwashing hurts both the companies partaking in it and the companies taking genuine strides to reduce their environmental footprints. Greenwashing itself is increasingly leading to legal issues, financial penalities, reputation damage, and lack of consumer trust. It also puts companies even farther behind in terms of making real environmental progress.
And the costs are starting to add up.
Recently, Brazilian mining company Vale paid $55.9 million in fines to the U.S. SEC for making allegedly false and misleading disclosures about its dams in its sustainability reports. Walmart and Kohls have also coughed up millions due to "deceptive green claims" about their products.
Greenwashing also undermines organizations that are actively working on holistic sustainability. Can the average consumer really tell the difference between a sustainable and a sustainably-marketed product just based on the product’s label and in-store packaging? Maybe, but also also maybe not. Greenwashing erodes trust, even for brands that are genuinely trying to make positive progress.
Environment:
In 2023, the last thing we need to be doing as a society is making, transporting, and discarding yet more ephermal, unsustainable products. There’s so much critical work that needs to be done by companies to lower their emissions, reduce waste, limit the use of toxic materials, and clean up supply chains. We don’t really have time to waste on empty slogans and half-truths.
How to Spot Potential Greenwashing?
Unfortunately, greenwashing is extremely common. According to a study by the European Commission, 53% of examined environmental claims made by organizations in the EU were misleading, unfounded, or vague.
Below are some examples of greenwashing tactics companies are currently using:
Using vague language and labeling
Source: Copy That Co.
Advertising powerful images of nature
Making claims that can’t be proven or are unsubstantiated
Releasing data that’s misleading, incomplete, or wrong
For example: A company claims they increased their use of biodegradable products by 50% BUT in reality they increased biodegradable products from two products to three products out of 500 products
What’s Being Done to Stop Greenwashing?
Currently, there aren’t many rules in place that prevent organizations from greenwashing, but we’re starting to see that change, particularly in Europe and the United Kingdom.
Green Claims Directive
In late March, the European Commission proposed the Green Claims Directive. The goal of this directive is ensure that there’s better transparency and data quality around products that are labeled as “green” for consumers. Currently, there’s around 230 sustainability labels and 100 green energy labels used in EU markets. The Green Claims Directive intends to provide clear criteria on how companies can label their environmental efforts with the goal of having a consistent standard that businesses can follow.
Companies that make environmental claims will need to have them independently verified and backed by scientific evidence. Those that make false claims will be subject to penalties including fines and exclusions from public funding.
This directive still needs to be approved by the European Parliament and the Council of the EU, but based on broad popular support and recent voting this looks likely to happen in the coming months. Once it’s approved, member states will be required to enforce it locally.
Vote on Legislation to Improve Product Labeling
A few weeks ago, members of the European Parliament voted on a new rule to ban unsubstantiated environmental claims. Parliament would like to ban the use of vague environmental terms like “environmentally friendly” and “natural” if they aren’t backed up by scientific research. The rule also looks to go a step further and ban claims of carbon neutrality and net zero targets solely achieved through the use of purchased carbon offsets.
EU Ecolabel
The EU Ecolabel helps consumers in the EU make sustainable purchasing decisions. It was launched in 1992 and helps to distinguish products or services that meet the highest environmental standards. Currently, 88,045 goods and services have been awarded the EU Ecolabel. It helps consumers identify environmentally friendly products and encourage products to be more sustainable.
For a product or service to be awarded an EU Ecolabel, it must meet a set of strict guidelines that were created and reviewed by scientists, NGOs, and various industry experts.
The majority of EU Ecolabel products are in Spain (18%), Italy (15%), France (13%), and Germany (10%). We expect European and international brands looking to put forth valid (and safe) green claims will increasingly need to complete and qualify for standards like EU Ecolabel, and keep their underlying sustainability data in good order for ongoing claims verification, audits, disclosure, and compliance with regulations like the EU CSRD.
Source: EU Ecolabel Facts and Figures
The UK Advertising Standards Authority and Competition and Markets Authority
In the UK, the Advertising Standards Authority (ASA) sets out rules, requirements, and conduct guidelines for brand advertising. Under the ASA’s CAP and BCAP Codes, advertisers can’t make misleading claims and must back up claims with substantiated data.
The ASA is very strict around enforcing its guidelines. If an organization is found to have breached the CAP Code, it may be required to remove or edit the ad, and, in some cases, pay a fine.
Mirroring the EU, in recent months the ASA has been weighing in more on greenwashing — and taking an increasingly strict stance against it. For example, companies that claim to be carbon neutral through offsets must now prove their offsets work. As a result, seeing the clear writing on the wall, Gucci recently dropped its claims and messaging about being ‘carbon neutral.’
Last month, the UK also introduced new legislation, the Digital Markets, Competition and Consumer Bill, which also includes anti-greenwashing provisions and penalties. In the bill, which was was introduced to the House of Commons on April 25, 2023 and is currently being debated and scrutinized by Parliament, companies could face fines of up to 10% of their global revenue for making misleading green claims.
Source: Good on You
The new law will further strengthen the UK’s Competition and Markets Authority (CMA) powers to penalize greenwashing, and is expected to be passed in 2024. This year the CMA has already announced investigations into companies like ASOS, Asda, Nestlé, and Tesco for marketing green products with vague or unsubstantiated claims.
Federal Trade Commission (FTC) Green Guides
In the US, the FTC lays out guidelines to help marketers avoid creating misleading or deceptive environmental claims. These guides were created in 1992 and have been updated three times since their creation (so perhaps due for a refresh?). They outline how to properly market environmental claims with substantiated evidence, and how consumers will likely understand certain claims.
While the FTC’s Green Guides are a good starting point for regulating greenwashing, they offer much weaker enforcement than current and pending EU and UK legislation. This to, we hope, will change.
Right now, the responsibility to notice and avoid greenwashed products in US largely falls on the consumer. As a result, a lot of US greenwashing enforcement has taken the form of class action lawsuits against sustainability claims.
That said, a lot of advertising industry insiders seem to be acknowledging that the era of unaccountable sustainability advertising is coming to a close. If anything, that means genuine, verifiable sustainability performance should become even more of a competitive advantage, because it allows authentically sustainable brands to dominate the airwaves around these claims.
Final Thoughts (For Now) on Greenwashing
Collectively, the best way forward on sustainability and climate action starts with telling each other the truth. We need to be honest about how products are made, where materials come from, and, most importantely, how we can do better. Yes, sustainability is an attractive brand and product characteristic, but that really sticks when with substance, not marketing.
As an industry, we need to support the companies who are actively working to be more sustainable, and call out companies that sabotaging trust through greenwashing. Now, more than ever, it’s important to be able to distinguish the difference between green products and greenwashed products. Data doesn’t lie.
As a starting framework, here is a short list from EcoWatch on how to indentify more authentically green products and companies:
Products are manufactured (and transported) sustainably
Items arrive with minimal packaging (which should in turn be recycleable and/or compostable)
Products are free of toxic and hazardous materials
Products themselves are able to be re-used, recycled, and/or made from recycled materials and circular processes
Produts are made with biodegradable materials
Products are designed to be repaired and/or reused
The company is transparent about its supply chain, sourcing, and product lifecycle
The company offers end-of-life programs, options, and solutions for its products (i.e., take-back, consignment, recycling, refurbishment)
More regulations to stop greenwashing are coming soon. In the meantime, continue to be thoughtful, diligent, and question environmental claims that don’t meet the burden of proof.
And, if you are a sustainable brand, keep leaning in and making progress. You’re in a leadership position, and the future looks bright.
—
This Week in Sustainability is a weekly email from Brightest (and friends) about sustainability and climate strategy. If you’ve enjoyed this piece, please consider forwarding it to a friend or teammate. If you’re reading it for the first time, we hope you enjoyed it enough to consider subscribing. If we can be helpful to you or your organization’s sustainability journey, please be in touch.