What is greenwashing?
Greenwashing occurs when a company makes false or misleading claims about the environmental benefits of a product or practice. The term was first coined in the 1980s following an incident environmentalist Jay Westerveld had with a towel in a South Pacific hotel room — a story I unfortunately don’t have room for here! A decade later, greenwashing had made its way into the Oxford Dictionary.
An expanding vocabulary
New words have emerged in recent times to keep up with how greenwashing manifests in practice. The non-profit financial think tank Planet Tracker has identified six greenwashing practices that include greenrinsing (setting moving targets that you change without due explanation or transparency), greenlabelling (using ill-defined and unverified labelling terms, such as ‘eco-friendly’) and greenlighting (shining a spotlight on a positive action that is negligible compared to the less positive actions comprising most of an organisation’s business as usual activity). For more information on greencrowding, greenshifting and greenhushing, do visit Planet Tracker’s website.
Terms are also spreading to include other colours (‘blue-washing’ and ‘pink-washing’) and beyond just the environmental agenda (‘social washing’ or ‘purpose-washing’). Is this because greenwashing is an expanding problem?
How pervasive is greenwashing?
Research suggests the challenge of greenwashing has never been greater. In 2021, a website sweep undertaken by the EU and national consumer authorities found that of hundreds of environmental claims investigated, 42% were false. The ESG research business RepRisk, which has tracked greenwashing behaviour since 2007, also found that greenwashing was ‘broadly on the rise’ in the year to September 2023. Oil, gas, banking, and the financial industry faced the largest numbers of allegations, although no industries are immune to greenwashing.
It’s fair to assume that not all greenwashing is deliberate and that some is the result of genuinely well-intentioned mistakes, although these proportions are tricky to quantify.
What impact does greenwashing have?
Whether deliberate or not, greenwashing has a range of negative consequences. It can mislead people into thinking they are making a more positive impact than they actually are. And the realisation of this can lead to people experiencing ‘greenwash fatigue‘ and growth of mistrust in all companies, even those really making a positive change. This is dangerous at a time when we need decisive and bold action to keep global temperatures from rising beyond 1.5°C.
Organisations found guilty of greenwashing will increasingly face fines and legal action, as well as experiencing reputational damage and a loss in trust from customers, investors and other partners. Edie reported earlier in 2023 that seven out of 10 UK consumers don’t believe environmental claims are credible.
What action is being taken?
Encouragingly, regulators are starting to act. In the UK, the Competition and Markets Authority (CMA) announced in January 2023 it will check sustainability claims by businesses to make sure they follow UK consumer protection law.
The Advertising Standards Authority (ASA) has also announced that organisations can no longer use the terms ‘net zero’ or ‘carbon neutral’ unless accompanied with clear evidence of what they mean. In parallel, a proposal for new EU greenwashing legislation was adopted in March 2023 as part of the European Green Deal; greenwashing and climate neutral claims will be banned by 2026.
How can we combat greenwash?
Day to day, individuals need to continue to be vigilant. Looking for third-party evidence for product or organisation-level claims can help identify which ones are robust, whether it is a Fairtrade label on a bar of chocolate or organisational commitment to align emissions reduction targets to the Science Based Targets initiative.
Businesses keen to avoid accidental greenwashing should ensure there are solid foundations to their sustainability strategy, and commit to transparent and jargon-free communication on progress. Companies which issue sustainability reports and which follow the GRI (Global Reporting Initiative) guidelines, for example, have been found to greenwash less.
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