Greenwashing

Take a look at your shampoo bottle or an item in your pantry. Is the packaging recyclable? Is it “naturally derived”? Does it come from a “sustainable” brand? Chances are, you are being misled by those labels. In order to meet increased consumer expectations for environmentally friendly products and services and reach net zero emission goals, companies have taken a less than ethical approach to advertising their products: greenwashing.

More than ever, consumers want to know where their products originate, how they’re made, who makes it, and so on because they care about the environmental and social impacts of their purchasing choices. This can cause issues for companies who do not meet certain standards with their products and services; perhaps a product is packaged with plastic because the alternative packaging is more expensive. Companies may need to determine at what point they invest in the more costly but environmentally conscious choice rather than risk the loss of customers, particularly those in younger generations. As increasing commitments have been made towards changing practices harmful to the environment, firms face pressure to improve. Under these circumstances, greenwashing has emerged.

“Greenwashing is the process of conveying a false impression or providing misleading information about how a company’s products are more environmentally sound. Greenwashing is considered an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly.”i

Fast fashion has been under scrutiny for developing clothing that is quickly discarded after trends have passed, harming the environment with pollution, and impacting communities where clothing is thrown away. Last year, Greta Thunberg called out these brands for deceiving consumers with words like “sustainable” and “green” when, in reality, their methods are anything but.ii H&M, for example, has a collection of clothing made from recyclable materials and in-store recycle bins where, in theory, the clothing can be deposited and reused.iii However, in 2018, only about 14.7% of all textiles, including discarded clothing, were recycled.iv

Whether intentional or not, customers can be taken advantage of through greenwashing. Many are willing to spend more on a product that is labeled better for the environment, thus making it more appealing for a company to advertise a product in such a way. “A Nielsen report found that 73 percent of Millennials and 62 percent of Generation Z’ers prefer to purchase from and support sustainable brands.” v

“Younger generations are clearly prioritizing eco-friendly and impactful brands, while moving away from (or even boycotting) those that aren’t striving to make a difference.” vi

Some research has shown that 4 out of 10 products and services are deceivingly advertised as good for the environment.vii Volkswagen is one notable example of greenwashing and unethical practices. In 2015, they were caught using devices that altered emission test data so VW cars could meet emission standards. More recently, Volkswagen and BMW were fined by the European Commission for “collusion that impedes innovation in green technology.” The two companies had agreed to maintain emission-reducing technologies at minimum requirements in order to avoid competition with each other. viii 

Below is an example of a FIJI Water advertisement that uses greenwashing tactics:

The next stage of greenwashing has developed as companies take action to balance out their negative environmental impact in order to reach net zero emission goals. “Forest credits,” as some are calling it, refer to companies taking steps to counteract harmful environmental affects that result from their products or services. For example, Delta Air Lines purchased an Indonesian forest and Cambodian wildlife sanctuary “to offset pollution from its jets.” ix It allows brands to claim they have reached net zero emissions. In reality, they are preserving an already existing forest while maintaining unsustainable practices.

As pressure to improve harmful environmental practices increases for firms across the world, marketing managers will need to maintain the balance between promoting sustainable practices to entice customers and unintentionally greenwashing. When promoting the latest product or improving a company’s branding, it is imperative to consider the effects greenwashing can have on customer relations. Maintaining clear messaging, remaining conscious of product and service development and implications, and enhanced awareness and practice of corporate social responsibility can help mitigate the risk of greenwashing.

Questions marketing managers would consider:

  • Why might firms use greenwashing as a promotional strategy? What are the benefits, and what are the potential issues that can arise?
  • What are the ethical implications of intentionally misinforming customers about a firm’s products or services in order to generate more revenue?
  • As a marketing manager, what can you do to ensure your firm is not misleading customers with false messaging?

References

i Kenton, W. (23 January 2021). “Greenwashing.” Investopedia. https://www.investopedia.com/terms/g/greenwashing.asp

ii Mlaba, K. (20 August 2021). “Greenwashing: What Is It and How to Avoid It.” Global Poverty Project, Inc. https://www.globalcitizen.org/en/content/greenwashing-what-is-it-and-how-to-avoid-it/

iii Ramaniah, Z. (12 December 2019). “H&M’s Greenwashing: Short-Sighted and Unethical. Brandium. Inc. https://www.brandingmag.com/2019/12/12/hms-greenwashing-short-sighted-and-unethical/

iv United States Environmental Protection Agency. (2 July 2021). “Textiles: Material-Specific Data.”https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/textiles-material-specific-data

v Drougas, S. (2022). “How to Avoid Greenwashing in Marketing.” RedSky Strategy. https://redskystrategy.com/how-to-avoid-greenwashing/

vi Drougas, S. (2022). “How to Avoid Greenwashing in Marketing.” RedSky Strategy. https://redskystrategy.com/how-to-avoid-greenwashing/

vii Reuters. (26 October 2021). “Explainer: Greenwashing: deception and vague promises that do not help the environment.” Reuters.  https://www.reuters.com/business/cop/greenwashing-deception-vague-promises-that-do-not-help-environment-2021-10-26/

viii Boston, W. (8 July 2021). “Volkswagen, BMW Fined $1 Billion by Europe Over Diesel-Tech Collusion.” The Wall Street Journal. https://www.wsj.com/articles/volkswagen-bmw-fined-1-billion-by-europe-over-diesel-tech-collusion-11625741892?mod=Searchresults_pos5&page=1

ix Lederman, J. (5 December 2021). “Corporations are turning to forest credits in the race to go ‘carbon-neutral.’ Advocates worry about ‘greenwashing.’” NBC Universal. https://www.nbcnews.com/news/world/corporations-are-turning-forest-credits-race-go-carbon-neutral-advocat-rcna7259