One of the most pressing challenges of our day is climate change. While the issue is compelling everyone to act, businesses experience even greater pressure than other stakeholders. In recent years, consumers have become increasingly conscious of their actions’ environmental impact. As a result, they are now pressing corporations and brands to offer “green” products, putting them under pressure to fight climate change. Therefore, many companies are now offering sustainable products and services — or so it seems. Could they be just “greenwashing”?
Jay Westerveld coined the phrase “greenwashing” in 1980 after noticing that some hotels without a recycling program encouraged guests to reuse their towels with a placard that read, “We will change your towels only at your request to help. Save the environment.”[1] He suggested that those hotels were concerned with cost reduction and profit gain since their sole environmental effort was changing towels: they were merely pretending to be eco-conscious. Hence, the term “greenwashing.” The Oxford English Dictionary defines greenwashing as “the creation or propagation of an unfounded or misleading environmentalist image.”[2]
As consumers become more aware of the effects of climate change, they expect companies to take action. They are concerned about packaging, animal testing, recycling, ingredients, and other commercial practices that undermine our natural resources and threaten the future of our planet. Even when they are not reacting in real life, they respond adversely on social media, damaging companies’ reputations. Consequently, businesses are taking steps to overcome such challenges, yet people are discussing whether those steps are indeed transparent, sincere, and environmentally friendly.
The popularity of sustainability has compelled companies to alter every aspect of their business models, from their supply chains to their business objectives. They use socially conscious and ecologically friendly activities to outperform their rivals. However, despite addressing environmental issues and mitigation strategies in their marketing, most sustainability or eco-friendly claims may be fraudulent or misleading. In this case, “greenwashing” is at play.
Let us remember: “Perception is reality.” Businesses use certain statements and marketing tactics to influence public opinion. They can mislead consumers by providing false information, emphasizing one eco-friendly feature of a product that is otherwise environmentally harmful, using green packaging (McDonald’s switched its logo’s colors from yellow and red to yellow and green in 2009), or providing accurate information that cannot be refuted anyway. So, what can consumers do about it? They can be on the lookout for brands with seemingly eco-friendly packaging, read and question any claims on packages, check to see if a company has the green certification it claims to have, and look up products’ manufacturing sites to find out their distance to the current location. Keep in mind that traveling farther produces higher carbon emissions.
When many nations have ratified the European Union’s climate-neutral commitments, Green Deal, and Paris Agreement, and we are witnessing a global fight against environmental problems, it seems unethical for companies to “pretend” to be eco-conscious. These false claims may also give rise to legal issues. For instance, Deutsche Bank allegedly overstated the worth of clean energy funds and offered them to specific clients, perpetrating a capital investment scam. As a result, a greenwashing investigation was initiated against the company. The claim was that the bank exaggerated the sustainability criteria of investments, inflated the value of so-called sustainable investment funds (i.e., ESG products), and misled investors by providing false information. Similar incidents remind us that, in addition to being immoral, such practices also pose legal risks to businesses.[3]
Greenwashing has challenged many brands to date. In March 2022, climate activists sued TotalEnergies, a significant oil, and gas company, alleging that the firm misled consumers by promising to be carbon-neutral by 2050 while continuing to invest in fossil fuels. While the case’s ultimate verdict is expected next year, the lawsuit demonstrates the legal aspect of greenwashing.[4] In 2022, consumers sued Burger King and McDonald’s for using environmentally hazardous packages despite their sustainability claims; Burt’s Bees for using environmentally hazardous chemical ingredients despite advertising natural personal care products; Transitions2Earth for deceiving consumers about the biodegradability of its containers; and Reynolds Consumer Products for claiming that its bags were suitable for recycling while using LDPE plastics, thus contradicting its statements.[5] The ultimate rulings in these pending cases will likely impact the legal and corporate sectors. Previously, Mercedes-Benz, BMW X5, and 355d Diesel Vehicles, Volkswagen, and Audi were sued for falsely marketing their diesel cars as being clean and eco-friendly by utilizing emissions cheating software.[6] The cases resulted in settlement agreements in court.
In 2021, the High Court of Australia issued a record fine of $125 million on Volkswagen for deceiving authorities and customers about the environmental effect of its vehicles, which served as a warning to other companies to take greenwashing seriously. [7]Another big greenwashing case involving two businesses occurred in Italy near the end of 2021. The Italian Court approved the interim injunction case of Alcantara S.p.A. against its rival Miko S.r.l. for alleged greenwashing (it is also significant that the court referred to the European Parliament and the Council’s Unfair Commercial Practices Directive no. 2005/29/CE and its implementing regulation to rule on this case).[8] These events indicate that companies that use deceptive or misleading statements in their marketing may face reputational and legal consequences.
In the United Kingdom, the Advertising Standards Authority (ASA) charged many prominent companies, including Innocent Drinks, Oatly, Hyundai, and Shell, with greenwashing through their ads. The Authority clarified that it would take action against false environmental claims, stating, “We won’t hesitate to take action against any ads that break our rules.”[9] The spokesperson of ASA suggests that consumers are now more conscious about their purchasing decisions and making more infringement claims.
In conclusion, companies wishing to outperform their rivals should consider that Generation Z is more environmentally conscious and bold than the earlier generations. Therefore, they should take environmental action and advertise it honestly, without misleading customers. Brands that support social causes and contribute to sustainability initiatives exist and will continue to do so, and we can be confident that they will prosper in the long run.
[1] Koçer ve Delice, “Yeşile Boyama ve Yeşil Güven Arasındaki İlişkide Algılanan Yeşil Riskin ve Algılanan Tüketici Şüpheciliğinin Aracılık Rolü”, Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, Issue: 50, July-December 2017 pp. 1-25.
https://dergipark.org.tr/tr/download/articlefile/386588#:~:text=tespit%20edilmesi%20%E2%80%9Cye%C5%9File%20boyama%E2%80%9D%20kavram%C4%B1n%C4%B1,Jay%20Westerveld%20taraf%C4%B1ndan%20ortaya%20at%C4%B1lm%C4%B1%C5%9Ft%C4%B1r. (accessed on 30.06.2022)
[2] https://www.oxfordlearnersdictionaries.com/definition/english/greenwash?q=greenwashing
[3] https://www.reuters.com/business/finance/deutsche-banks-dws-allegations-greenwashing-2022-06-09/
https://kilimgazetesi.de/haber/deutsche-bankta-sular-durulmuyor-dws-ceosu-istifa-etti-35108.html
[4] https://www.power-technology.com/news/totalenergies-sued-for-alleged-greenwashing/#:~:text=The%20French%20energy%20group%20has,carbon%20neutral%20by%202050%20commitment.
[5] https://truthinadvertising.org/articles/six-companies-accused-greenwashing/
[6] For similar incidents, see https://truthinadvertising.org/articles/six-companies-accused-greenwashing/, https://www.jdsupra.com/legalnews/greenwashing-a-survey-of-recent-3195116/
[7] https://theconversation.com/high-court-decision-on-125-million-fine-for-volkswagen-is-a-warning-to-all-greenwashers-171733
[8] https://www.forbes.com/sites/edgarsten/2021/12/08/alcantara-wins-major-court-battle-against-greenwashing/?sh=4e6172431cb3 , https://www.cliffordchance.com/insights/resources/blogs/business-and-human-rights-insights/2022/01/italys-first-greenwashing-case-between-corporates.html
[9] https://www.thedrum.com/news/2022/03/23/8-times-brands-fell-foul-asa-greenwashing
