The Rise of Greenwashing in Business

Reporting on a company’s goals for sustainability is a topic that has been debated a lot in recent years, especially after COP24. With businesses being pressured to become greener, many are publicly promoting their sustainability efforts. The problem is that some of these claims can be misleading, commonly referred to as ‘greenwashing’.

Greenwashing refers to companies using language such as ‘eco-friendly’, ‘sustainable’, and ‘environmentally friendly’ without evidence to back up their claims. It has become a very real problem, no matter the industry or the size of business. In the UK, the CMA (Competition and Markets Authority) believes that around 40% of green claims made online could be misleading to consumers.

As more companies begin to look at their sustainability goals and create a road map to net zero as well as workout their ESG policies, greenwashing claims are on the rise. In this EnergyIntel, we’ll go through some examples, how it can harm the business’ reputation and how to avoid it.

How greenwashing affects sustainability goals

Greenwashing can have a negative impact on the wider community trying to tackle climate change. Those who make false claims about their businesses green policies and goals can distract from the environmental challenges and the credible action that is being taken. 

The UN has set up a High-Level Expert Group to provide a set of clear and strong standards for any pledges regarding net-zero emissions by companies. There are now ten recommendations that will help businesses make net-zero pledges. They have also set up a checklist for those companies wanting to work towards their own net-zero goals.

Greenwashing and the effects on reputation

If messaging is deemed to be ‘greenwashed’, there is a chance that the business’ reputation will be damaged, and there may be pushback from consumers and environmental organisations as to how and why this happened. If it is serious enough, you could be made to take any false advertising claims down, and have a potential fine to pay, damaging the business further. 

Other damage caused could include a loss of sales, media scrutiny, and a risk of customers not taking any truthful claims seriously in the future.  

Currently, the EU is in the process of creating a “Green Claims” directive, aimed at tackling greenwashing head on. This means that companies will have a responsibility to substantiate the claims they are making on packaging or in advertising.

There are different ways that companies can be caught in the ‘greenwashing trap’. Below are some examples: 

A hidden trade-off

This happens when companies use their marketing to say that a product is eco-friendly while being aware of the harmful traits and ignoring them. For example, stating that a product uses recycled products but then is packed in single-use plastic. They can also be caught out if they overstate their environmental credentials, for instance, oil and gas companies who advertise their growing investment in renewable energy and lower carbon technologies while still profiting off the fossil fuels they provide. 

Not providing any proof

An issue that companies can encounter when it makes empty statements about a product’s sustainability with little to no proof. This can include those who claim that their plastic products are made from “ocean-bound” plastic, which is to say, it’s been prevented from going into and polluting the ocean. These claims are often unsubstantiated or false, but it is incredibly hard to prove what plastic will have found its way into the ocean to begin with. 

Being too vague

This is possibly the most common of the greenwashing examples. This is where a company can put something generic and broad with no real value to it on their advertising or packaging. Popular claims include “green” or “sustainable” targets or certifications. 

Using misleading labels or certifications 

Another common problem for companies is when they label a product as sustainable or environmentally friendly, but the claim is not true. Consumers can therefore be misled about the labels that companies use and assume they are green or environmentally friendly. 

Green hushing – the flipside 

As well as greenwashing, there is now another growing trend called green hushing. This is where businesses will keep quiet about their sustainability efforts and policies in an attempt to avoid being caught by the greenwashing trap. This too can backfire, as the general public will think not enough is being done by those who keep quiet about their progress. This can also stop other businesses from getting involved in creating their own sustainability targets as they don’t see the progress being made within their industry. 

A survey of 1,200 companies across 12 countries found that a quarter of companies surveyed said they would not publicise their science-based net zero emissions targets. This can become a problem long-term as more companies decide against setting more ambitious targets and don’t discuss ongoing progress. 

Green marketing best practices

The CMA have come up with the Green Claims Code – a list of claims that will show how businesses are providing a product or service that is less harmful to the environment. They want consumers to be able to identify which environmental claims are genuine so they can make informed choices about what they’re buying. 

The CMA’s code states that green claims must: 

• Be truthful and accurate;
• Be clear and unambiguous;
• Not omit or hide important information;
• Only make fair comparisons;
• Consider the full life cycle of the product; and
• Be able to provide evidence that is credible and up to date.  

Along with this, there are ways that you can market your business as green and avoid greenwashing when doing your marketing. 

1. Have the correct certifications and prove them on your website where necessary. Certifications that are accredited by political bodies like the European Union or United Nations are a good way of looking at which institutions to trust. 
2. Take responsibility for your words and actions. If an issue comes up or a case of mistaken greenwashing occurs, putting it right and being honest about it will set you apart from those who greenwash deliberately. 
3. Use fact-based evidence. Always link back to scientific evidence or data that you’ve taken part in or used in your reports. 

Companies need to be aware of the impact that greenwashing can have, not only on their business reputation but also on the efforts of others trying to combat climate change. Businesses that are open and honest about their efforts to achieve net-zero will be more likely to be viewed favourably by the media, consumers, and investors.