Greenwashing 101 – What Is It, Examples, and More (Explained)

Quick Summary

Greenwashing 101 explores the deceptive practice of companies presenting themselves as environmentally responsible without genuine commitment. It includes historical context, motivations behind greenwashing, and its detrimental effects on genuine environmental progress.

It delves into various tactics companies use to mislead consumers, legislative efforts to combat greenwashing and specific industry examples, highlighting the fine line between genuine environmental marketing and greenwashing.

The guide emphasises the importance of scepticism towards too-good-to-be-true claims and adherence to principles ensuring transparency and honesty in environmental claims, urging for continued improvement in corporate sustainability efforts.

Introduction

Greenwashing, in which companies claim environmental responsibility without substantial evidence or action, is far from recent.

The concept gained momentum in the 1960s, spurred by growing public concern over industrial pollution and the publication of Rachel Carson’s influential book ‘Silent Spring’. The book played a pivotal role in the birth of the environmental movement.

This era saw companies eagerly adopting a green facade to align with the burgeoning environmental consciousness. A strategy initially critiqued as ‘eco-pornography’ by a leading advertising executive!

Green Business Strategy

The market for ‘green products’ and sustainability labels has proliferated, especially with the advent of online shopping (surveys have shown that sustainable goods sell better online than in-store).

The appeal for ‘green products’ has surged in today’s digital age. Notably, over two-thirds of people say they “always or often” seek sustainable products or belong to a ‘sustainable brand’.

Capitalising on the significant proportion of consumers actively seeking sustainable products, companies extensively leverage green claims to market various items, from vehicles and travel options to beverages and household cleaners.

Despite the accuracy of some claims that reflect an actual reduction in environmental impact, many are either misleading, lack evidence, or, in the worst cases, completely false.

The issue is now more diplomatically referred to as greenwashing.  

What is Greenwashing?

Greenwashing has increased as consumers increasingly seek to buy environmentally sound products.

In 2021, the European Commission disclosed they had reason to believe that 53% of green claims were either vague or misleading. For this reason, claims are now subject to scrutiny under new EU regulations.

This leads us neatly to why companies do it.

Why Do Companies Greenwash?

Companies greenwash primarily to capitalise on the economic benefits of being seen as environmentally responsible.

The potential for profit (or loss) tied to a company’s green image is substantial.

Being perceived as eco-friendly has the potential to greatly affect a company’s market share, brand loyalty, and overall profitability. This is because an increasing number of consumers prefer sustainable brands and are willing to pay more for products and services marketed as environmentally friendly.

Research

Research conducted by Barron’s in the United States underscores this trend, revealing that almost 70% of consumers prefer to purchase from socially conscious brands and are willing to spend more on these products.

Numerous studies and market analyses across various sectors have further validated this consumer behaviour shift towards sustainability. For instance, a Nielsen report highlighted that products with a sustainability claim on the packaging outperformed the growth rate of total products in their respective categories.

Why Is Greenwashing Bad?

Greenwashing is, by definition, deceitful or, at best, misleading.

Its purpose is to deceive consumers and investors into thinking they are genuinely buying from or investing in companies taking action to reduce the environmental impacts of their activities, products or services.

From anybody’s viewpoint, this is unethical (bad) behaviour.

For Environmental Impact

The environmental impacts of greenwashing are profound. By diverting attention from necessary sustainable practices, greenwashing contributes to ongoing environmental degradation and impedes genuine progress towards global goals like net zero.

If the impression is that progress is being made, why do we need to push companies to do more? Why do we need to change or do more?

Consumers, misled by greenwashing, may unknowingly support products and services that are significantly harmful to the environment, thus inadvertently contributing to pollution, waste, and the depletion of natural resources.

This misdirection hampers the collective efforts needed to address climate change, preserve biodiversity, and transition towards a truly sustainable economy.​

For example, fossil fuel companies like Shell and BP are still pumping millions of £s into greenwashing, making meaningless net zero pledges and introducing false “solutions” to gloss over their decades of destruction.

They falsely paint themselves as taking action while extending their obsolete business’s deadline.

For Business

For the business sector, greenwashing can have serious long-term consequences.

While it might offer short-term gains in sales or brand image, being caught in deceptive practices can do irreparable damage. Damage to a company’s reputation, legal repercussions, and loss of consumer trust and loyalty are just some of the impacts.

The backlash from greenwashing scandals can discourage businesses from pursuing genuine sustainability initiatives, as they fear being labelled greenwashers. Thus, it can stifle innovation and progress in sustainable business practices.

For Social Impact

Greenwashing misleads consumers and investors by presenting companies as more environmentally friendly than they are. It severely undermines consumer trust.

When companies falsely advertise their green initiatives, consumers become sceptical of environmental claims, making it harder for them to trust even legitimate sustainability efforts.

This scepticism can lead to consumer apathy towards sustainable products, potentially slowing down the adoption of genuinely green alternatives

Types of Greenwashing

Greenwashing takes many forms and evolves as companies find new ways to hide their true intentions. Early papers introduced the concept of the ‘7 sins of greenwashing’; more recent papers expand on those earlier concepts and introduce new forms.

The Seven Sins of Greenwashing (The Original Seven Plus One)

Below are eight forms of greenwash organisations employ along with their links to the original ‘7 sins’:

Sin 1. Green but vague language (or the sin of vagueness)

We often encounter products or services labelled ‘green’, ‘sustainable’, or ‘eco-friendly’. But what do these terms really mean? If there’s no evidence or standard backing these claims, they likely mean very little!

Echoing the wisdom of the Romans, ‘caveat emptor’ (let the buyer beware!).

Sin 2. Misleading or false data (or the sin of fibbing)

Along with making baseless claims through language, organisations will often fabricate data or fund research to produce misleading data that improves their image.

For example, oil giant Exxon knew as early as 1979 from its own research, that its activities would cause “dramatic environmental effects” but instead of acting on it spent over 20 years funding the manufacturing of a counter narrative to undermine the growing scientific consensus around climate science.

The fossil fuel industry’s campaign to create uncertainty about the climate crisis paid off for decades by muddying public understanding of the growing dangers of global heating and stalling political action.

Sin 3. Greenlighting (or the sin of the hidden trade-off or the sin of the lesser of two evils)

Using communications and marketing to point out particularly green features of a company’s operations or products and divert attention away from poor environmental practices they’re performing elsewhere.

In 2023, Shell had some adverts banned in the UK for making misleading claims about how clean its overall energy production is just focusing on the low-carbon energy products, which account for a tiny percentage of its overall fuel mix and ignoring that it had also expanded its gas business by a fifth and produced greenhouse gas emissions equivalent to 1,375m tonnes of carbon dioxide!!

I guess, in this case, it is the little things that matter!!

Sin 4. Greenhushing

Similar to greenlighting, greenhushing is where consumer and corporate engagement communications deliberately underplay, under-report, and hide data on sustainability.

A recent South Pole survey involving 1,200 global sustainability executives revealed that nearly a quarter failed to publicise their climate achievements and milestones beyond the bare minimum required by initiatives like the Science Based Targets initiative.

How often do we hear “…we are meeting all minimum regulatory and reporting requirements” in the sustainability world, even if we know those are inadequate?

Sin 5. Greenrinsing (or the sin of irrelevance)

In greenrinsing, companies adjust their environmental, social, and governance (ESG) targets before achieving them. This manoeuvre prevents anyone from holding them accountable and ultimately ensures they never reach their goals.

For example, over the space of five years, PepsiCo changed its recycling targets three times, while Coca-Cola did so twice. In addition to the ever-moving targets, both global brand owners identified many risks that might prevent them from meeting their targets: 47 from Coca-Cola and 13 from PepsiCo.

I guess some targets are less important to achieve than others!!

Sin 6. Greenshifting

Greenshifting is described as ‘…when companies imply that the consumer is at fault and shift the blame on them’.

In 2020, an example of the blame game unfolded when Shell, the oil and gas giant, inquired about what people were willing to do to help reduce the world’s carbon emissions. American politician Alexandria Ocasio-Cortez quickly called them out for this move.

Alexandria decried,

“The audacity of Shell asking YOU what YOU’RE willing to do to reduce emissions when they have been lying about climate change for 30 years when you secretly knew the entire time that fossil fuels emissions would destroy our planet”

– powerful stuff!!

Sin 7. Greencrowding

Greencrowding is where companies hide in groups to avoid having their environmentally damaging practices discovered.

A Planet Tracker report, released in 2022, identifies the members of the Alliance to End Plastic Waste (AEPW) as an example of this: “In the first three years of its operation, the AEPW recycled less than 0.0004% of global plastic generated”, not much of an effort to end plastic waste there!

Number 8 (An additional sin). Deceptive imagery (or the sin of worshipping false labels)

We often associate sustainability with green imagery, whether trees, forests, grass, or flowers.

Unfortunately, this is a deceptive way companies can try to appear more environmentally friendly than they actually are.

The Renault Twingo advert is an example of a misleading advertisement. The UK’s Advertising Standards Agency ruled that the ad was “likely to mislead”.

The advertisement showcased a green background with an image of the car. On one of the leaves emerging from the exhaust, the words “eco-nomical eco-logical” were written.

The ASA noted that the car’s CO2 emissions (not even among the top 10 low-CO2 cars) were insufficient to justify the impression created by the image of leaves coming out of the exhaust and the ‘eco-logical’ claim.

Is Greenwashing Illegal?

The legal campaign against greenwashing is accelerating. Legislation is in place to prevent false or misleading green advertising in China, Canada, Singapore, the EU, and the UK.

In France, greenwashing can result in up to two years in jail and a fine of 300,000 Euros.

In the UK

Under the digital markets, competition and consumer bill, expected to come into force later in the year, big companies face the threat of civil penalties of up to 10% of global turnover for breaches of consumer law.

Individuals who breach these laws will face fines of up to £300,000.

The Act will introduce new powers for the Competition and Markets Authority (CMA) to impose direct civil penalties on companies making misleading environmental claims.

In the EU

In the EU, the European Union has introduced a regulation that fines companies for unsupported environmental claims.

This law also bans advertising that implies products are;

• designed to have a longer lifespan,
• makes unverified durability claims under normal use, or
• falsely portrays them as repairable when they’re not.

Financial Conduct Authority (FCA) greenwashing rules

The Financial Conduct Authority (FCA) greenwashing rules are set to take effect in May this year.

These new rules mandate that FCA-authorised firms ensure sustainability claims about products/services are fair, clear, and not misleading.

Additionally, these claims must align with the actual sustainability characteristics of the product or service.

Despite the seeming straightforwardness of these requirements, an ongoing consultation seeks to clarify these terms’ exact definitions.

Surprisingly, the necessity for such specific rules suggests a history of questionable sustainability claims by these organisations.

What is clear is that legislation to tackle greenwashing is becoming commonplace, and the size of the penalties is also growing.

But, will this legislation impact misleading claims, or will companies find new ways to hide their true impacts or intent?

I guess this is the $64 million question. The proof of the pudding will be in the number of companies facing penalties for misleading consumers.

Greenwashing Examples

You don’t need to look far for a glut of Greenwashing examples. A quick internet search will yield everything from false or misleading statements to vague or totally fabricated claims.

Here are some notable examples from the Fashion, Finance, Oil, and Gas industries.

Greenwashing in the Fashion Industry – H&M

H&M was using a scorecard system to inform customers about the environmental soundness of each product, but a report by Quartz claims that more than half of the scorecards portrayed products as being better for the environment than they actually were.

The report also found some instances in which H&M’s scorecards allegedly gave information about a product’s sustainable practices and sustainability that was completely opposite from the truth.

A watchdog group found that the scorecards use only averages of the environmental impact of types of textile rather than giving the full environmental impact of the manufacture and sale of a particular finished piece of clothing. These misleading labels are a blatant example of greenwashing.

Greenwashing in the Financial Sector – HSBC

In what marked the ASA’s first action against a bank for greenwashing, the UK’s advertising regulator banned two HSBC poster advertisements for being “misleading” about the company’s work to tackle climate change.

The Advertising Standards Authority (ASA) said HSBC can no longer run the ads which promoted its plans to reduce harmful emissions. The posters were seen at bus stops in London and Bristol in the lead-up to the United Nations COP26 climate change summit and outlined HSBC’s efforts to plant trees and help its customers achieve “net zero” emissions.

The watchdog said that the posters “omitted material information” about HSBC’s activities noting that HSBC’s annual report said its financed emissions relating to clients and projects it provided loans and services to were linked to the release of 65.3m tonnes of carbon dioxide a year.

That figure only accounted for its oil and gas clients but would probably be much higher if other carbon-heavy industries such as utilities, construction, transport and coal mining were included.

That’s an awful lot of trees, about half of the total area of woodland in the UK today in fact!!

Greenwashing in Oil Companies and Gas Industry – BP

In 2022, BP spent £800,000 on social media influence ads on Facebook and Instagram, championing the company’s investments in green energy just after the Labour Party proposed a windfall tax on oil and gas company profits.

The ads promoted BP’s plan to “transition to net zero” by gradually reducing oil and gas production and investing more in “low carbon” and renewable energy sources. However, these investments were dwarfed by the amount of money they spent on fossil fuel development, including continuing to open up new oil and gas fields.

A study commissioned by the environmental group Greenpeace showed that BP generated just 0.17 percent of energy from renewable sources in 2022. Unsurprisingly, these figures have led to the adverts being branded as greenwashing; however, they did, I suppose, say they were doing it gradually!

Greenwashing – B Corp?

Earning a B Corp designation is intended to mark a company as socially and environmentally aware.

To secure this certification, for-profit companies must meet the stringent criteria set by the US-based nonprofit B Lab Global. Despite the high standards, over 8,000 companies, including global giants like Ben & Jerry’s, Patagonia, and The Body Shop, have earned this distinction.

B Corps are celebrated as some of the most socially and environmentally responsible companies worldwide. However, recent research shows that these companies can score as low as ZERO in specific areas, including environmental impact. They can achieve this if they offset it with exceptional performance in other areas.

Therefore, the scoring mechanisms take a trade-off approach, which allows for greenwashing in the B Corp promise.

B Corp Criticisms – B Lab’s B Movement Builders Initiative

The scheme has also been criticised since the introduction of B Lab’s B Movement Builders initiative in 2020.

This is a certification programme specifically for publicly traded companies with at least $1bn (£790,000) in revenue.

B Movement builders are said to have a large ambition of helping to create a new narrative about the role of business. The movement affirms the role B Corps play in changing the culture, practices, and operating system of capitalism! This has led to more multinational companies gaining certification.

Interestingly, some of the B Corp criticism has come from scheme members. In 2022, a group of B Corp-certified coffee companies, alongside Fair World Project, wrote an open letter to B Lab Global in response to Nestlé-owned coffee company Nespresso receiving its B Corp designation.

They called out Nespresso’s “abysmal track record on human rights” and “extractive business model”. Understandably, they asked for stricter standards across B Lab Global.

Later that year, the certification came under fire again. Another open letter from British beer B Corp Brewdog workers alleged a “culture of fear” in which workers were bullied and “treated like objects.” This was despite Brewdog achieving its highest scores in the worker-assessment areas. Brewdog subsequently lost its certification.

So, is B Corp just another vehicle for greenwashing?

The answer is, as always, nuanced. While there is always a risk of greenwashing in any certification process, the B Corp scheme is relatively robust and requires a degree of continual performance improvement. Because of that, it can be a driver for performance improvement.

It really just depends on the company’s intent. If the intent is to greenwash, the scheme can be manipulated; in this case, the answer could be ‘yes’.

If the intent is to demonstrate an open and accountable commitment to sustainability and social responsibility, the scheme can provide that framework. In this case, the answer is ‘no’!

Is Carbon Offsetting Greenwashing?

Using carbon offsets to help achieve net zero targets is a much-debated topic (particularly in the IEMA training courses I teach).

While some parties claim that carbon offsetting fulfils this function, others (me included!) see it as a form of greenwashing. It’s trying to convince consumers that a company’s products or services are more ecologically friendly than they are in reality.

Unfortunately, it’s often a way to maintain the status quo and delay emissions recuctions.

When done correctly, carbon offset projects can reduce overall carbon emissions or increase carbon storage. However, many of these projects are short-term solutions. That’s because they fail to decisively address the fundamental need to reduce emissions to meet net-zero targets.

Greenwashing occurs when companies neglect to prioritise reducing their own emissions, double-count carbon credits, or invest in unverified credits. This misleads the public into believing the company is dedicated to cutting carbon emissions when it’s not.

Consider offsets only as a final measure for emissions you cannot mitigate otherwise.

Your company’s net zero strategy should avoid relying heavily on large-scale offsetting.

How to Avoid Greenwashing

The best way to avoid greenwash is to follow the UK’s Green Claims Code published in 2021. The code contains six key principles to counter misleading environmental claims.

The six principles aimed at tackling greenwashing state that claims must:

Be truthful and accurate

Claims must contain correct and true information. They must not state or imply things that are factually incorrect or untrue. Nor should they overstate or exaggerate the sustainability or positive environmental impact of a product, service, process, brand or business

Be clear and unambiguous

Ensure the meaning consumers derive from a claim matches its environmental credentials and impacts.

For instance, only market future goal claims if you have a clear and verifiable strategy for achieving them. Moreover, claims must clearly distinguish the business’s broader environmental goals from product-specific claims.

It’s all in the communication of your net zero efforts – learn how to get them right!

Not omit or hide important/relevant information

A claim should not highlight a product, service, process, brand, or business’s positive environmental aspects to mislead consumers, especially if other aspects have a negative impact.

This is critical when the benefits claimed pertain only to a minor aspect of a product or service or a portion of a brand’s or business’s activities.

Selectively presenting information in this manner can lead consumers to perceive a product, service, process, brand, or business as more environmentally friendly than it actually is.

Be fair and meaningful if they include comparisons

Use fair and meaningful comparisons, allowing informed choices without misleading assertions of superiority. A claim should not say or imply, through the use of language or imagery, that one product is, for example, ‘greener’ or ‘environmentally friendlier’ or ‘more energy efficient’ than another if it is not.

Consider the full life-cycle

When making environmental claims, businesses should consider the effect of the total life cycle of a product/service and activities. The accuracy of their claims must take the whole picture into consideration.

If a claim is based on a specific part of an advertised product’s life cycle or part of a business’s activities, it should be clear which aspect it refers to. By doing so, businesses can avoid misleading consumers about the total environmental impact by ignoring some other aspect of its life cycle.

Consider a lifecycle analysis for your business.

Be substantiated

Businesses should, therefore, be able to back up their sustainability claims with robust, credible, relevant, and up-to-date evidence. When they compare their products or activities to one or more competitors, that evidence should cover all of them.

Increase the green skills within your team

Training your staff up with green skills programmes, such as these IEMA courses, can help everyone to get on the same page when it comes to sustainability and being mindful of greenwashing statements.

Greenwashing vs. Environmental Marketing

While greenwashing involves misdirection and deceptive marketing, green marketing is honest, transparent, and focused on highlighting a company or product’s green credentials and actual environmental strengths.

Businesses must back up any environmental marketing claim about specific products with proof or endorsement from a relevant organisation. Making vague or unsubstantiated claims will class you as engaging in greenwashing.

In essence, the primary difference between greenwashing and green marketing lies in the proof you can provide to support your claims.

A Greenwashing Conclusion

Greenwashing is not a new phenomenon.

As consumers and investors grow more environmentally conscious and demand eco-friendly practices, an increasing number of companies falsely portray themselves as aligned with sustainability goals.

Research in the EU and elsewhere has uncovered many institutions making “misleading or false claims” about their sustainability credentials. They do this to boost their profits.

At best, this greenwashing misleads and erodes trust. At its worst, it hinders genuine progress in crucial areas, like achieving net zero.

What to do about it

As techniques grow more sophisticated, spotting greenwashing becomes increasingly challenging. Thus, approach claims that seem too good to be true or lack evidence with scepticism.

Additionally, watch for claims that apply only to certain parts of the business or specific goods, maintaining a critical eye.

Also, just because an item has a label, it doesn’t necessarily mean that it is better than one without one; it may not even have passed an independent verification process (and even if it has, that process is only as good as the information provided or may only be based on a snap-shot in time!).

There is nothing inherently wrong with using green claims to support the marketing of a product or service, but these claims have to be honest and truthful. In fact, they should be based on the six premises discussed above.

Given the size of the market and consumer demand for green goods, a company’s claims will become even more important.

The hope is that green promises drive actual continual improvement and progress towards meeting the substantial environmental and social issues we face today.

Oh, and finally, to paraphrase a famous quote, ‘no unicorns were harmed in the making of this blog’…honest!!