Written by: Mike Edmunds

Posted on: 07/03/24

Types of Greenwashing and their Impact

‘Greenwashing is the attempt to make something – a product, practise, service or an entire organisation – appear more sustainable or environmentally friendly than it truly is.’ – Tackling greenwashing from a governance perspective’, Emily Ford, the Chartered Governance Institute UK & Ireland.

The action is harmful as it is misleading to consumers who inadvertently support organisations who are not as sustainable as they seem. Companies who engage in the practise also open themselves up to a myriad of risks. There are many different types of greenwashing, and reasons an organisation may have for engaging in the practise. No matter the reason, it is unacceptable in the fight to reduce the impact of climate change.

Types of Greenwashing

Selective Disclosure is the action of only disclosing information which makes an organisation appear successfully sustainable, and omitting any negative information which might give a holistic representation. The goal is to portray a falsely positive image of an organisation’s sustainability efforts to drive up sales and brand perception.

Meaningless Targets such as publicly pledging to an environmental target, without engaging in any business practises to see the target through to fruition. This is also seen when targets are presented without contextual information, allowing organisations to ‘move the goalposts’ whilst still reaping the face-value benefits of being a sustainable organisation.

Unsubstantiated Claims similar to meaningless targets, but more typically seen in the marketing or branding of a product or organisation. Terms such as ‘carbon-neutral’, ‘ethically sourced’, and ‘eco’ are presented without evidence or context. Consumers are duped into believing that they are supporting a sustainable enterprise when the opposite may in fact be true.

Related Terms

Green-hushing; avoiding referencing sustainability or ESG when presenting a product or organisation to deflect or hide inadequate advancement.

Blue-washing; Refers to the blue of the EU flag and logo, and originated when organisations were accused of taking credit from the UN’s Global Impact to benefit from the initiative while declining to enact meaningful policies.

Greenwashing Examples

The term ‘greenwashing’ was coined by an environmentalist in the 1980s in response to a series of misleading marketing campaigns. The phenomenon is still prevalent today, with Greenpeace announcing a ‘new golden age of greenwash’.

Many companies fall foul of merely offsetting the negative impacts produced by their organisation, rather than addressing the root problems of their unsustainable outputs. Coca-Cola sponsored COP-27; however, it remains one of the world’s biggest plastic polluters.

HSBC, a UK high street bank, was flagged by the Advertising Standards Agency for a series of ads which promoted the bank’s investment in climate-friendly initiatives. The ads were ordered down by the ASA as they neglected to showcase the company’s other investments into unsustainable oil and gas.

Not to mention Starbucks’ straw-less lids, which contain more plastic than the previous straw-and-lid combination.

The Consequences of Greenwashing

There are severe and tangible consequences to greenwashing. The loss of consumer trust in a brand should they face any kind of disciplinary action is harmful to its reputation. Fines and increased shareholder scrutiny also number amongst the associated risks of greenwashing.

The loss in bottom-line earnings both in the long and short-term should be deterrent enough for companies to adhere to a truly sustainable policy. So why don’t they?

The difficulties, including implementing large-scale policy changes and the associated costs, make it harder for organisations to embrace ESG and sustainability despite its imperative.

How to Avoid Greenwashing

The unsympathetic suggestion is for organisations to be honest about their sustainability claims, wherever they fall on the ‘green’ scale.

However, with more and more legislation appearing globally regarding the reporting of organisation’s ESG policies and scoring, there is less and less wiggle room for inaccurate data, fudged reports, and insincere targets.

Rather than funnel time and resources to appear greener than they are, organisations interested in capitalising on the green boom should instead prioritise accurate data.

The ability to accurately collect, report, and present relevant sustainability information from suppliers will reflect positively on any green claims an organisation makes. As the majority of an organisation’s carbon emissions rest in the supply chain, and these emissions are much harder to accurately appraise and therefore combat, this should be the starting point.

It is easier to be honest in sustainability reports and marketing when you have confidence in the accuracy of the information you are basing your claims on.

Using a reputable reporting framework ensures that you can trust the data you collect.

Ensuring that targets are measurable and time-bound (preferably science-based) will save you from falling foul of working towards a meaningless target.

Include as much detail as you can in claims, prioritising transparency to avoid selective disclosure greenwashing.

Implementing change can be challenging – but this is the starting point for the journey to a more sustainable future.

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