What is Greenwashing?

Learn all there is to know about what greenwashing is, examples of this practice and the risks involved.
By Persefoni Team
July 21, 20227 min read
August 4, 2022, 5:55 PMUpdated
July 21, 2022Updated: August 4, 2022, 5:55 PM7 min read

The benefits of companies appearing to be more environmentally friendly continue to grow, as do the marketing benefits of fabricating or artificially enhancing the sustainable credentials of a business, product, or service. “Greenwashing” is the name given for creating a false impression or inflation of environmental action through misinformation. 

Greenwashing has been around since consumers started to notice the environmental issues associated with consumerism in the 1960s. However, it didn’t get labeled as such until 1986, when college student Jay Westerveld described an experience he had in Fiji in an essay on the hotel industry. He noticed that one of the hotels on the island asked patrons to reuse towels to “help them help the environment” and protect the corals, while it conducted an environmentally destructive construction project behind the scenes to expand its square footage. As a witness to this hypocrisy, he wrote in his paper that “It all comes out in the greenwash.” The term was picked up by a local magazine and eventually caught on in the wider media.

Since those first days of greenwashing, the environmental movement has grown, and with it, the amount and sophistication of greenwashing have expanded. Today, the green sheen can be sprayed across products and services with complex data or claims that are difficult to substantiate or prove wrong without considerable investigation. This can make greenwashing hard to identify for consumers, and sometimes even companies misunderstand environmental issues and inadvertently greenwash. For these reasons, it is important to understand the different types of greenwashing and how to best avoid them.

Seven Sins of Greenwashing

Greenwashing can take many forms. Over the years, these forms have gotten more sophisticated from the straight-up unsubstantiated lies of the past. Companies now include creative use of research to make them seem greener than they are. An example of this is carbon offsetting, which has given high polluters like airlines and oil and gas companies the ability to set net zero goals with unverifiable forestry conservation offsets.  

There are many other examples of greenwashing; each type typically falls into seven buckets, otherwise known as the seven sins of greenwashing. These seven sins include:

1. The Hidden Trade-Off

When the solution of an environmental issue turns out to be just as bad or worse than the initial problem. 

Example: The introduction of paper straws by fast food restaurants is considered more environmentally friendly than plastic straws. However, paper straws are more carbon-intensive to make than plastic straws and can sometimes take longer to biodegrade.

2. No Proof

When companies make completely unsupported or unsubstantiated claims about environmental performance.

Example: The Changing Markets Foundation found that Coca-Cola has been making baseless claims with very little evidence on intercepting “ocean-bound” and “recyclable” waste to do their part in the plastic waste crisis.

3. Vagueness

When companies make claims or targets that fall apart under scrutiny and lack the specifics of how they made their claims or how they will reach their targets.

Example: Many companies have made net zero emissions claims, yet recent research suggests that some of the world’s largest companies are far off their net zero targets. 

4. Irrelevance

When a company advertises an environmental feature that has no relevance or does not matter.

Example: One of the earliest examples of greenwashing is Chevron’s “people do” advertising campaign. The campaign used TV ads like this one that talks about restoring nature after exploiting it for oil, which was already required by law; therefore, the claim was irrelevant. 

5. Lesser of two evils

When a company or sector claims that what they do is better than other methods, while their methods are still incredibly damaging to nature.

Example: The palm oil industry has always maintained that they are a lesser evil and that palm oil is more energy dense and has a higher yield than other oil crops. While at the same time, palm oil production is one of the biggest factors in deforestation and biodiversity loss globally.

6. Straight-up Lies

Companies who willfully avert the truth or make claims that are patently false. 

7. False Labeling

When a company falsifies a certification or labeling to mislead consumers. 

Example: In 2011, the Fair Trade Commission uncovered a certification called “Tested Green,” which claimed to test products through two 3rd parties for how environmentally friendly they were. But it never actually conducted any testing, and the third parties they used were subsidiaries. The company would actually just give away “Tested Green” certificates for a fee. 

Knowing these seven sins of greenwashing can help consumers know how to spot greenwashing. And importantly, companies must know as well to avoid being accused of greenwashing as the repercussions of doing so are increasingly onerous. 

Is Greenwashing Legal?

Until recently, greenwashing that came to light was more of a PR nightmare than a legal issue. One study from the UK claimed that of the respondents, 21% would never use brand again after they were found to be greenwashing

However, as environmental performance has become more closely linked to economic performance in recent years, regulators have started to see accurate environmental data as pertinent to stakeholders and investors, moving the issue further into the courts. 

Recent landmark cases have moved greenwashing from the realm of public relations to the legal realm. In the Netherlands, Dutch airline KLM is being brought to court for ads that mislead consumers on how sustainable their flight is. This would come under the greenwashing sin of vagueness as they say KLM is making aviation more sustainable without any solid goals or figures. But this is just one example of many cases against high emitting greenwashers. 

In addition to the current individual cases being litigated, a growing number of regulators around the world are putting laws in place to ensure companies are not greenwashing. The SEC’s recent climate disclosure proposals, for instance, aim to guarantee companies are accurately measuring and reporting on their GHG emissions, and in the EU, SFDR will force companies to disclose substantive sustainability-related financial information.

How Can Companies Protect Themselves From Greenwashing Claims?

The short-term benefits of greenwashing from a marketing perspective increasingly result in long-term reputational damages for companies. To protect themselves from greenwashing claims, companies look to third-party auditors or accreditation companies to seek assurances of their claims through regular and transparent ESG reporting. 

Companies also use accreditations and standards to help prevent accusations of greenwashing; some of the more reliable ones include:

  • LEED - A certification that helps companies get their built environment accredited for their environmental performance with a rating system that ranges from certified to platinum.

  • Science Based Target initiative (SBTi) - Helps companies and financial institutions make net zero targets and create progress toward them based on the best available science.

  • CDP - Helps companies, cities, states, and regions disclose their environmental impacts by measuring and managing their risks and opportunities on climate change, water security, and deforestation.

  • ISO 14001 - Gives clear tools and guidance for companies to measure and report their environmental impacts.

Alignment with these and other reliable accreditations allows consumers, investors, and companies to know their environmental claims are accurate and truthful.

Another method for companies to protect themselves from scrutiny is by utilizing software platforms like climate management and accounting platforms (CMAP). With CMAP and similar platforms, there is a data trail that can be used to ensure the environmental data and reporting are wholly accurate and transparent. They also connect to the various disclosure systems and include embedded accreditations in its platform, allowing companies to align with them automatically. 

For a better understanding of how CMAPs can be utilized to ensure alignment with accreditations, full auditability assurance, and compliance with any anti-greenwashing legislation, you can schedule a free demo.