What is greenwashing and how does it affect consumerism?

What is greenwashing and how does it affect consumerism?

As consumer concern about the impact companies have on the planet increases, various industries adopt a green marketing strategy to cater to the consumer’s interest in eco-friendly products. According to Nielsen's Global Corporate Sustainability Report, 66% of consumers are willing to pay more for products that are a sustainable, the highest figure among millennials being at 73%. This encourages companies to start evaluating their own environmental Corporate Social Responsibility (CSR). 

However, there is a fine line between green marketing and greenwashing. Greenwashing is when companies claim environmental performance and mislead consumers into having a positive belief in the brand’s environmental practices or products. There are examples of companies using vague terms and data to veil their previous environmental records and wrongdoings. Overall, companies spend more on marketing their product to look eco-friendly and sustainable rather than dedicating themselves to lessen their impact on the planet.

Greenwashing has become increasingly sophisticated over the past decade, posing a prominent problem for the sustainable landscape.

Where does greenwashing stem from?

You might think it’s a new marketing strategy but in fact greenwashing has been around for more than 30 years! The term "greenwashing" was first coined by environmental activist Jay Westerveld in 1986 in a critical essay inspired by the hospitality industry. Westerveld was an undergraduate on a research trip to Samoa. He stopped off in Fiji and found a card in his hotel room reading: "Save Our Planet." The hotel claimed that millions of gallons of water are used to wash towels that have only been used once a day and recommended customers reuse their towel during their stay rather than receiving clean ones daily.

Westerveld saw the irony in the "Reuse the Towel" movement the hotel was wasting more resources while claiming to protect the local ecosystem. In fact, the hotel was in the middle of expansion when Westerveld visited and was building more bungalows, which probably contributed to the most prolific pollution on the island. He concluded that the hotel simply wanted to reduce laundry costs by not having to wash towels. However, it marketed this cost-cutting program as an eco-friendly move. 

Greenwashing in various sectors of the consumer market

Whether it’s a cleaning product with a green packaging claiming to be more environmentally friendly than any other options, or a "natural" shampoo slapped with a green label that says it’s both healthy for your body and the planet – companies are increasingly keen to showcase their green credentials. However, their products are not necessarily as eco-friendly as they suggests. Here are some blatant examples of companies greenwashing their products: 

Biodegradable or compostable plastic products from Walmart

Walmart is allegedly selling plastic products in stores and online that were misleadingly labeled “biodegradable” or “compostable” while neither being scientifically proven nor backed up by any third-party certification. Greenwashing cost the retailer giant US$1 million to settle the lawsuit for its violation of California law in this regard.

Organix Shampoo

Despite Organix Shampoo never claiming its product to be organic, the misleading name, and its tagline: “Beauty, pure and simple,” might make consumers intuitively assume the brand in question is organic. Not surprisingly, only 1 in 18 ingredients of their latest feature product is found to be certified organic.

H&M Conscious Collection

Being socially conscious sells. H&M introduced its ‘Conscious Collection’, claiming that ‘every piece in the collection is made from sustainably sourced material, such as 100% organic cotton or recycled polyester’. Although the percentage of conscious products that account for the overarching production is not specifically informed, the company reportedly produces 550 to 600 million garments annually (based on third party estimates) to which the vast majority is not conscious. Norway's Consumer Authority even ruled that the fast fashion giant is under investigation for its failings to specifically explain how their products are more 'sustainable' than others they sell. 

Are there any legal provisions on “greenwashing”? 

greenwashing example plastic

There’s no certifying body to determine how green terms should be used for marketing purposes. There is also no clear definition of what the terms mean. Brands can market their products as green, sustainable, and eco-friendly without having to provide any proof. In the US, the Federal Trade Commission (FTC) issued its first “Green Guides” in 1992, which were reevaluated and revised over time. Green Guides are not legally binding, and serve only to provide guidance to businesses on appropriate eco-labeling practices.

Much to our anticipation, the European Parliament has approved the Taxonomy Regulationwhich will determine what constitutes ‘green’ asset managers. With the regulation coming into force, it will clamp down on “greenwashing” tactics so investment can flow towards actual sustainable processes. The new legislative framework will come into force in March 2021.  

Shop intentionally and practice what you preach!

greenwashing corporations

Greenwashing has developed and become more sophisticated over the past decades, posing a prominent problem for the sustainable landscape. Big companies with larger budgets are able to launch click bait content, research, and PR events with narratives that favor themselves and simultaneously shift consumers’ attention from smaller businesses that operate ethically and sustainably. Consumers should be wise when selecting green products, as we now have more access to information when it comes to fact-checking the claims or credentials a brand is promoting. 

Interestingly, consumers want corporations to be green, but also want their sustainable purchase to perform better than their unsustainable counterpart. A study found that consumers value the strength of a product but often have negative associations with sustainable options due to their higher price and lower mainstream accessibility and distribution.

While most consumers say they care about social and environmental issues, market behavior does not reflect these values.  65% of consumers say they want to buy purpose-driven brands but only about 26% actually do. 

Many of the environmental and social problems people express concerns about could be partially alleviated if our shopping behaviors aligned with our deeply held values. Perhaps if we want companies to do good by the environment, we need to spend our money accordingly and not fall in the trap of compulsive buying based on capitalistic campaigns and click bait marketing. It's easier said than done - we know - but we're in this together!

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