A businessman pointing a banana like a pistol, representing how some companies exaggerate their ESG claims through greenwashing

What is Greenwashing?

In the corporate world, greenwashing refers to a company’s efforts to make it seem as if they are more environmentally friendly than they really are. The term is a combination of the words “green” and “whitewashing.”

If a company that produces high levels of pollution or uses environmentally unfriendly practices wants to improve its public image, it might try to convince the public that they are environmentally conscious. To do this, they may introduce “green” efforts like planting trees or making their buildings more energy efficient. However, these efforts often only amount to window dressing and don’t result in any real change for the environment.

Why is greenwashing a social problem?

There are many reasons why greenwashing is a social problem. First, companies that lie about their environmental practices can be deceiving to consumers who might opt to purchase one item over another because they believe it is better for the environment when in reality the opposite might be true. This could cause people to buy items indiscriminately without thinking about whether or not they are actually being beneficial to the environment.

Deforestation and greenhouse gas emissions

Another reason greenwashing is a social problem is that it contributes to deforestation and greenhouse gas emissions. Warehouses do not need as much paper or cardboard if they use marketing materials that tout recycled products, but those claims often turn out to be false which means less recycled material is used and more trees are being cut down.

$100B wasted time and money

Finally, this practice can take away from the time and money spent by organizations developing truly beneficial environmental practices if they are instead spending their time trying to fool people into thinking they already have those benefits. Greenwashing also raises costs for consumers who might buy products that claim to be earth-friendly but are really not. Over $100 billion is spent each year on green products and services that people think are better environmentally than they actually are, which could be better used elsewhere.

The Greenwashing Strategy

Greenwashing is not an accusation; rather, it is a strategy used by business to appear more environmentally friendly when in fact they are not trying to be. The problem with greenwashing is that it makes consumers less aware of the real environmental practices a company uses and gives them a false impression about how earth-friendly a business really is.

Greenwashing Takes Many Forms

Greenwashing can take many forms, from outright lying about a company’s environmental practices to omitting important facts or using vague, exaggerated language about their efforts. If you are concerned about a company’s claims, make sure they are substantiated by contacting them directly.

How Greenwashing Affects Organizations

Since the term “greenwashing” was coined in 1986, businesses have become much more aware of how environmentally friendly they need to appear. Yet a 2013 report from TerraChoice Environmental Marketing found that 60% of all consumer products “green” claims were false or misleading.

As a result, consumers have become more cautious about which companies they trust and many are unwilling to pay a premium for green products. In addition, as more businesses use greenwashing tactics, people have come to expect this kind of marketing and may ignore a company’s actual environmental practices.

Why Greenwashing is Bad for Your Business

Greenwashing has been used in nearly every industry, from energy production to cosmetics. The motivation behind greenwashing typically is the desire to appear more socially responsible than competitors or increase sales. However, there are some important reasons why businesses should not engage in greenwashing.

1.) Greenwashing is deceptive and forces consumers to make purchasing decisions based on incomplete information.

2.) It makes businesses less likely to engage in real environmental practices if they think their efforts will be ignored or misunderstood by the public.

3.) Because there is no legal definition for terms like “natural” or “sustainable,” it is fairly easy for businesses to make false or exaggerated claims about their products.

4.) Greenwashing can lead to increased negative environmental impact by making organizations less likely to engage in real change.

5.) It has resulted in an increase of “buyer beware” behavior among consumers, who are less willing to trust green promises.

How to Avoid Being Mislead Greenwashing

If you see a company making claims about their environmental efforts, do the research into what they are actually doing before you make any purchasing decisions. To avoid being misled by greenwashing, look for third-party certifications that provide unbiased investigations into how a product is made and used. In addition, watch for vague claims about green benefits. If a business touts something as “green” without explaining how it improves things, there is probably more to this than meets the eye. Finally, research whether or not the target company is transparent and provide information about environmental practices. These can be often be found in the form of yearly ESG Reports which may be available on their website.

What is an example of greenwashing?

Since the term “greenwashing” was coined in 1986, businesses have become much more aware of how environmentally friendly they need to appear. Yet a 2013 report from TerraChoice Environmental Marketing found that 60% of all consumer products “green-ish” claims were false or misleading.

Zara and Uniqlo both used vague/exaggerated language in their green-ness and omitted important facts about their efforts. H&M outright lied about its environmental practices and should be considered the worst example in this scenario.

Does the term ‘greenwashing’ only apply to automobiles?

No, greenwashing can occur in any industry. While it is most common among car services, energy production companies, and retailers, it has been used by cosmetic companies as well as small businesses.

Who came up with green washing?

The term “greenwashing” was coined in 1986 by Jay Westerveld, a California advertising executive. He first used this term as part of his work on behalf of the American Forest & Paper Association as they were developing new environmental standards for paper companies that wished to participate in their program.

Greenwashing is also known as eco-labeling or “the practice of making unsubstantiated or misleading claims about the environmental attributes or benefits of a product, service, technology, or company policy.”

What are the signs of greenwashing?

If you see an advertisement or company claim that touts environmental benefits but does not include details about how the product/organization helps the environment, it may be considered greenwashing. It is also possible for companies to use vague language in their claims about the environment without outright lying.

What are some examples of over-the-top greenwashing?

Over-the-top greenwashing can include unclear claims about environmental benefits as well as completely false marketing. One of the most common kinds of over-the-top greenwashing is when companies claim that their product was made using recycled materials or earth-friendly methods without actually being true. The worst instance of this was by H&M who actually lied about its environmental practices and recycled materials.

What is the difference between green marketing and greenwashing?

Green marketing is when a company markets its products as environmentally friendly to gain an advantage over the competition. Greenwashing occurs when that claim is not completely true or may even be patently false.

Greenwashing techniques and environmental claims

Greenwashing techniques are often used by companies to make their products appear more environmentally friendly than they actually are. One common technique it to use vague language in advertisements and marketing materials that touts environmental benefits without providing any details about how those benefits were achieved or if the claims are even true. Another greenwashing technique is to use recycled materials without being honest about the level of authenticity of those materials.

Who is not so environmentally friendly?

Greenwashing is most common among car services, energy production companies, and retailers. Car services may use this technique to increase their business by using marketing materials that make it seem like they are more environmentally friendly than they actually are. Energy production companies often do this to earn trust and be seen in a more positive light among their customers. Retailers use this technique to make their products seem like they are better for the environment than others on the market, which increases sales of their particular items.

A 2013 report from TerraChoice Environmental Marketing found that 60% of all consumer products “green” claims were false or misleading.

What are some examples of greenwashing claims?

Some common examples of greenwashing claims include phrases like “eco-friendly” or “green energy.” A claim could also be unclear, such as when a car service uses marketing materials that tout its goal to reduce emissions without being clear about what the company is doing to achieve it. TerraChoice has a list of seven different types of greenwashing claims, from “Guilt Free” to “All natural,” which is available online.

Caveats and Disclaimers

We have covered many topics in this article and want to be clear that any reference to, or mention of environmental claims, environmentally friendly, green marketing, greenhouse gas emissions, misleading environmental claims, carbon dioxide, environmental impact, green sheen, oil company, chemical company dupont announced, environmental benefits, environmental claim, irrelevant claims, federal trade commission, eco-friendly, green packaging, corporate social responsibility, walmart’s sustainability campaign, mislead consumers, avoid greenwashing, chemical company dupont, walmart routinely donates money, sustainable brands, global warming, green lies, responsible company, retail giant responded, global consumers, environmentally responsible, sustainability campaign, consumer demand, green products, renewable materials, cheating emissions tests, green groups, fossil fuels, climate change, business model, organic cigarettes, eco friendly, solar resources, company’s image, double hulled oil tankers, certification program, emissions tests, false labels, slightly greener, brand image, gas stations, recycled cardboard, political candidates, eco friendly print media, water industry, non-toxic, straw less lid, companies, most consumers, considered greenwashing, green guides, recycled content and environmentally friendly goods in the content of this article is purely for informational purposes and not to be misconstrued with investment advice or personal opinion. Thank you for reading.