How many companies have you heard that went green in the last couple of years?
Companies using environmental movements to sell their products became something we witness monthly, if not weekly. However, unfortunately not all of them deliver what they claim. You probably remember when the giant McDonald’s replaced recyclable plastic straws with paper ones, only to find out later that their paper straws are not recyclable.
That’s precisely the practice known as Greenwashing. And it’s not only McDonald’s, unfortunately.
We’ve put together this detailed guide in which you’ll learn:
- What is greenwashing?
- Six types of greenwashing
- Greenwashing examples and strategies
- How does greenwashing harm a brand’s reputation?
- Green marketing vs greenwashing: what are the differences?
- Signs a company is greenwashing and how to spot it
- How to avoid greenwashing
Let’s dig in!
What is Greenwashing?
Greenwashing is the act of a company claiming to be environmentally sensitive for marketing purposes but in reality not making any significant sustainable measures. It has become among companies’ most used tactics for manipulating information to support their environmental, social, and corporate governance (ESG) claims. This is done to appeal to fund managers working on ESG Investing and Analysis and enhance their brand.
Greenwashing is unethical, as it misleads the public on the reality of the company’s activities and its actual operating practices.
And that is precisely what Chevron (oil company) did in the mid-’80s. It promoted its dedication to the environment in a series of TV ads while simultaneously violating the Clean Air Act and Clean Water Act by spilling oil in wildlife refuges.
Luckily, today it’s far more difficult to greenwash as Chevron did in the ‘80s.
Back then, people relied on television or radio to hear the news, and oil companies used it to their benefit since there was no technology available to fact-check the news or ads. However, today thanks to the access to information and technological advancements, people can double-check their information sources and question them.
But still, that doesn’t mean that greenwashing no longer exists. Companies are still promoting their products as more natural, recyclable, and eco-friendly, while in reality, they’re not.
To sum up, in this first part, greenwashing is the manipulation of information designed to mislead people into thinking that a company is making an environmentally responsible consumer product they are not.
Companies engage in this unethical act to persuade consumers who’d prefer to buy goods and services from eco-friendly brands.
6 Types Of Greenwashing
1. Hidden Tradeoffs
This occurs when a company makes a positive environmental claim about a product while ignoring broader negative concerns. The harmful factors are advertised positively, giving the buyer a misleading picture of the actual environmental effect.
For example, many companies emphasize that their packaging is recycled paper content while ignoring the negative repercussions of paper manufacturing, such as air and water pollution and deforestation.
2. Lack of Proof
Lack of proof is when a company lacks sufficient or provable data to back up its claims. Companies make statements that lack proof because they cannot be easily verified. Access to the actual data would require access from a third-party data collecting agency, which eventually costs money.
Companies that engage in such claims commonly provide their own evidence and self-verify their environmental claims.
So basically, it’s like making up your facts and the arguments supporting them.
3. Using Environmental Visuals
Some companies use visuals to appeal to consumers as environmentally responsible. Whether it’s through packaging or in their marketing campaigns, they use:
- Natural elements: Trees, waterfalls, mountains
- Human elements: Elders, babies, disabled people
- Color schemes: Green color (trees), blue color (oceans and seas)
Using environmental visuals is a marketing gimmick designed to mislead consumers into thinking that a product is eco-friendly, when it’s not.
I’m sure at this point, you’ve thought about a product or a couple you’ve seen before.
4. Misleading Labels
Misleading labels are self-explanatory. It’s when a company self-certifies its products as:
- 100% organic
Usually, these labels are self-created, and companies use them to push their “green marketing” campaigns without having an official verification.
5. Lesser of Two Evils
This type of greenwashing involves assertions that are not only irrelevant but also have debatable ecological value in the first place.
For instance, cigarette companies such as Philip Morris promote e-cigarettes as an environmental alternative to regular cigarettes instead of advertising to help people reduce or quit smoking. And the long-term effects of e-cigarette usage have not yet been properly researched.
We can all agree that reducing the use of harmful substances is much better than finding an eco-friendly alternative.
6. Irrelevant Claims
This type of greenwashing happens when companies make statements that appear valid on the surface but are ultimately meaningless. For instance, using the term “Vegan” for car seats instead of polyurethane, artificial leather, or non-animal leather.
Because the term “vegan” resonates better with consumers, car manufacturers choose this term to appeal to consumers who share those environmental and ethical beliefs.
Greenwashing Examples and Strategies
1. Philip Morris: e-Cigarettes
On its website, Philip Morris International (PMI) has a dedicated page on sustainability. It outlines everything from a low-carbon transition plan to “achieving a smoke-free future” that the company claims may be accomplished sustainably.
However, in 2014 the company released a new e-cigarette product named IQOS, claiming it’s an environmentally friendly alternative to regular smoking.
But here is what Philip Morris doesn’t declare. Growing tobacco worldwide requires over 22 billion tons of water, the equivalent of 8.8 million Olympic-sized swimming pools, typically in water-stressed areas. Tobacco growing is believed to have destroyed approximately 1.5 billion acres of forests since the 1970s.
E-cigarette trash may pose an even more significant environmental concern than cigarette butts.
With their new alternative, plastic, nicotine salts, heavy metals, lead, mercury, and flammable lithium-ion batteries are introduced into streams, soils, and animals by e-cigarettes.
Let’s have a look at a second greenwashing example.
2. Volkswagen: Emissions Scandal
Volkswagen launched an advertising campaign to disprove the myth that diesel was harmful and to promote that it used a technology that produced fewer pollutants.
Later, it was found that Volkswagen equipped 11 million of its diesel vehicles with “defeat devices,” or equipment meant to cheat emissions testing. The vehicles released pollutants at up to 40 times the US limit.
To resolve claims of falsifying emissions testing and fraudulent advertising, federal agencies ordered the corporation to pay $14.7 billion.
3. KLM: Misleading Carbon-Emission Free Claims
KLM has been claiming to its consumers that by paying extra fees, they can offset the CO2 emissions from their flights by funding forestry programs.
The airline has used catchy phrases such as “be a hero, fly CO2 zero” and “fly CO2 neutral“, implying that by planting trees, trips will have little to no influence on the environment.
However, carbon offset programs are coming under heightened pressure.
They can be deceptive and do not always guarantee reimbursement for CO2 emissions, whereas airline emissions are always guaranteed.
In its defense, KLM attempted to persuade the RCC that, despite the explicit phrasing, people would understand that their appealing marketing slogans weren’t indeed about traveling in a CO2-neutral manner.
KLM is not the first airline that has been involved in greenwashing scandals. There were other instances in which EasyJet and Ryanair made questionable and false claims regarding their carbon footprint.
How Does Greenwashing Harm Brand Reputation?
If you’re managing marketing and are worried about unintentionally harming your brand’s reputation, you must pay close attention to your green campaigns.
With pressure on every company to show off its greenness in 2022, it became almost mandatory for every marketing team to find a green aspect for their product or service. In fact, according to GreenPrint, 64% of Gen X customers would pay extra for a product if it came from a sustainable brand, and that ratio rises to 75 percent among millennials.
With these compelling stats, you should be careful about communicating your company’s greenness, so you don’t end up greenwashing, even unintentionally.
When consumers find misleading claims, they feel betrayed. And that backfires on companies because those customers will:
- Report to authorities or organizations
- Choose other competitors
- Leverage their social networks to boycott products or services
No executive wants to see their business go viral due to a boycott campaign. That’s the worst nightmare for a company.
Green Marketing vs Greenwashing: What are the Differences?
To put it simply, green marketing is the total opposite of greenwashing.
While greenwashing is unethical and based on fake and unbacked claims, green marketing is honest, transparent, and actually green. Green marketing stands behind environmentally responsible consumer products and advertises products and services that are:
- Sustainable in their production phase
- Simple and recyclable in packaging
- Made using renewable or clean energy
- Free of toxic or harmful materials
- Harvested from protected areas
- Not threatening nature and endangered species
- Produced by fairly paid and protected workers / fair trade
When you run green marketing campaigns, you must live up to your claims and be ethical and honest.
Because if you don’t do that, you’ve just crossed the line into greenwashing.
Green marketing is considered a part of corporate social responsibility, and unlike greenwashing strategies, it comes with great environmental responsibility.
Signs a Company is Greenwashing and how to Spot It
Sometimes all it takes to spot greenwashing is to look behind the buzzwords. Words like:
- Clean energy
- Zero Emissions
- Zero fossil fuels
Companies that make vague claims are suspected of greenwashing and putus at risk of climate change.
Do your research every time you have the chance and fact-check what companies are claiming. In some cases, it only takes common sense to spot greenwashing. There are plenty of environmental groups working on this, but still, here are a few tips on how to spot greenwashing:
- Rely on facts rather than claims
- Make sure claims are backed with data
- Look for verification by a third party
- Ask the company what they’re doing about a particular claim
- Consult with a professional
Sometimes it may feel like an investigation to spot greenwashing, but that’s how Phillip Morris, Volkswagen, and KLM were exposed for their unethical practices.
How to Avoid Greenwashing
It’s weird to say “How to avoid greenwashing” when we’ve already agreed that it’s an unethical and dishonest practice.
But it’s essential to learn how to avoid it because companies unintentionally fall into this trap.
Here’s how you can avoid greenwashing and contribute to environmental sustainability.
1. Make Honest Claims
“Honesty is the best policy.”
To avoid greenwashing, make your claims clear and easy to understand.
You don’t have to puff up your statements to seem better than your competitors, but rather stay true to your product, service, and consumers.
If your product is 65% organic, be specific and communicate it’s precisely 65% organic. Avoid statements such as:
- Certified organic products
- Fully organic
- Endorsed by XYZ
The more precise you are in your claims, the more you’re on the safe side of the green movement.
2. Back up Your Claims with Proof
A statement without proof is worth nothing. And companies’ sustainability claims must be questioned too.
For that, make sure to have data that is:
- And verified.
If one of the 3 factors above is missing, you risk falling into greenwashing.
You can seek third-party verification from a trusted source and get a certificate to validate your claims if needed.
3. Review Marketing Communications
Sometimes, business owners hear the terrible news only after the damage is done. Then it’s too late, so as a business owner, CMO, or leader at a company, keep a close eye on what your marketing team is communicating.
It might be an enthusiastic copywriter you just hired who’s super excited and may make unbacked claims publicly on your website or social media.
By reviewing and approving all communications before publishing, you avoid falling into this trap and can advertise honestly and confidently.
4. Use the Right Imagery
By now, you probably know that greenwashing doesn’t only rely on unbacked or falsely written claims.
Images play a huge role in how you advertise your products and services. Avoid using images or colors that are not authentic and consistent with what you’re offering.
Even though the impact of climate change is making headlines every day, it is shocking that companies continue to engage in greenwashing instead of working towards saving the planet.
Unfortunately, many companies still focus on revenue, regardless of the impact on our planet’s future.
After reading this guide, if there was one lesson to keep in mind: If a company makes a claim, ask yourself, where is the evidence, and is it credible?
Even the absence of evidence is considered greenwashing. It’s up to us to spot, prevent, and not engage with companies that practice it.
AI Solutions for Fast and Accurate Analysis of Text Data
The Accern NoCodeNLP Platform empowers financial advisors and investors to quickly research, extract, and analyze millions of unstructured data sets to understand a company’s ESG stance and performance.
Using the pre-assembled data sources – global news and public data and content from leading data providers including FactSet, Morningstar, Dow Jones, Naviga, and more – users can build ESG-focused NLP models with historical and real-time information.
With data on thousands of public and private companies and over 26 ESG events that come out-of-box including but not limited to fuel management, supply chain, employee health, safety, and wellbeing, labor relations, social impact, and business ethics, investors and financial firms can identify a company’s ESG practices by calculating accurate ESG sentiment scores.
Schedule a demo to learn more about the Accern NoCodeNLP Platform and how it can drive ESG-focused insights for your investment portfolio.