Greenwashing

Updated on April 12, 2024
Article byWallstreetmojo Team
Edited byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

Greenwashing Definition

Greenwashing is labeling products eco-friendly even when they are not. It is fake representation enabling brands to overcharge. Brands use misleading facts or impressions via packaging and labels. Most products and technology damage the environment directly or indirectly. Such products get banned or get restricted by laws. To circumvent laws greenwashing is done.

So many daily products damage the environment drastically—plastic water bottles, plastic bags, food packaging, disposable single-use razors, produce bags, disposable cutlery, paper coffee cups, and boxes of teabags. But brands clean up their image by promoting eco-friendly concerns.

Key Takeaways

  • Greenwashing is a term used for companies that pretend to be eco-friendly. They mislead consumers, society, government, and environmentalists.
  • Its purpose is to maintain a green brand image and maximize profits by taking advantage of the green movement. Customers are willing to pay extra for the sake of nature.
  • Green sheen trickery is achieved by false labels, green imageries, irrelevant or vague information, fibbing, lack of certification, and hidden trade-offs.

How Greenwashing Works?

Greenwashing is the fake representation of products. These products are marketed as good for the environment and take advantage of the demand for eco-friendly products. Expensive ad-campaigns shout how the products do not contain chemicals, are easily recyclable, consume fewer natural resources, and get disposed of without harming the environment. However, in reality, the company does not follow those eco-friendly practices.

As consumers adapt to the “Go Green” trend, it becomes essential for businesses to put environmental before profits. However, the label “eco-friendly” is a mere marketing gimmick for these greenwashing companies.

The word is derived by replacing white with green in “whitewashing.” But, just as whitewashing hides the stains on the walls, greenwashing covers up the truth behind the eco-friendly claim.

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History

Greenwashing can be traced back to the mid-1960s anti-nuclear movement across the US. The Westinghouse Nuclear Plant was criticized for harming nature despite providing affordable electricity with less air pollution. The company advertised cleanliness and safety with visuals of the nuclear plant near Pristine Lake. But all attempts to clean up brand image failed amidst nuclear meltdowns in Michigan and Idaho.

Jay Westerveld introduced the term “greenwashing,” in 1983. He was an American researcher and environmentalist. On his research trip to Samoa, he came across the Beachcomber Resort at Fiji. The resort asked their guests to reuse their towels to minimize the ecological damage to the oceans and reefs. However, Westerveld noticed that the resort was expanding near the ocean and building new bungalows endangering the coral reefs. This duality was named greenwashing. Consequently, in 1998, the Federal Trade Commission (FTC) circulated Green Guidelines.

Why do Companies Greenwash?

Companies play on the consumer’s concern for nature. Sales are banked upon the false pretext. Many organizations are leaking chemicals directly into rivers, hidden under the ground.

Thus, the green sheen is an escape to create a positive public image. It is a damage control strategy against environmentalists who raise factual concerns. Some businesses ramp upRamp UpRamp Up in economics refers to the boosting of a company’s production.read more by charging high prices in the name of eco-friendly.

Greenwashing Sins

Some of the common greenwashing sins are as follows:

Greenwashing

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Greenwashing Examples

  • ECM Biofilms, Inc. is an Ohio-based additives manufacturing company. It claimed that additives turn plastic products into biodegradable products. However, FTC found the company misleading the customers by making false claims. The company also claimed they scientifically tested those results. Moreover, in its product promotion, ECM came up with its self-attested certificates for the Biodegradability of Plastic Products.
  • Fashion Brands – H&M, Primark, and Zara: Greenwashing is even seen with top fashion brands. These companies recycle plastic bottles to convert them into trendy clothes. But they end up alleviating plastic waste. The process of turning plastic bottles into clothing removes them from recycling loops, where they can be made into new bottles again. Billions of tiny plastic particles that are shed from clothing during manufacturing, wearing, and washing still end up polluting the ocean and humans via air, food, and liquid intake.

Effects

Greenwashing drags consumers into harming nature unknowingly. In addition, these negative practices create mistrust against all green companies. As a result, greenwashing firms cause long-term damage to nature while increasing their consumer base.

How to Avoid Greenwashing?

Following are the ways to identify green sheen trickery:

  • Don’t get allured by fancy images or influential advertisements. Customers are recommended to verify the initiative towards sustainability.
  • Never trust irrelevant claims. Customers are recommended to research products by going through ingredients and labels.
  • Customers should learn more about ingredients. It is worth spending time on some independent fact-checking using credible sources.
  • The law requires correct labels & certifications from the companies for their practices in favor or against environmental protection. Even if the product is hazardous, the company must state the truth to safeguard human health and nature.
  • Based on a single product, customers should not assume that all products manufactured by the same brand are 100% eco-friendly.
  • Customers should be suspicious of free webinars or products. This way, they can prevent falling prey to green sheen companies.

Difference Between Green Marketing and Greenwashing

Some business entitiesBusiness EntitiesA business entity is one that conducts business in accordance with the laws of the country. It can be a private company, a public company, a limited or unlimited partnership, a statutory corporation, a holding company, a subsidiary company, and so on.read more genuinely adopt green initiatives. It is a real contribution to nature in contrast to trickery. For example, Timberland checks out, it manufactures fashion clothes, shoes, and accessories. It genuinely adopts sustainable practices and, therefore, is an example of green marketing. But when BP came up with its low carbon energy practices, it was met with suspicion. Many considered it a green sheen. BP plc is a British multinational oil and gas company.

Frequently Asked Questions (FAQs)

Why is greenwashing bad?

It deceives the trust of the consumers who are conscious of sustainability and want to contribute towards environmental protection. These companies charge high prices for their alleged green products. It is a duality. These companies proclaim concern for nature with misleading advertisements yet do not adopt any sustainable practices in manufacturing. The deception brings negative publicity to the green movement in itself.

Is Starbucks eco-friendly?

Starbucks is heading towards sustainability by not using single-use plastic and adopting eco-friendly ways like compostable straws, recyclable packaging, and wooden cutlery. However, PETA has criticized Starbucks for charging higher from environmentally aware customers who order vegan milk food items instead of dairy-based products.

What is an example of greenwashing?

Coca-Cola is accused of being the biggest plastic polluter in the world. The brand claims to use 100% recyclable plastics in 18 markets by 2030. The company vows to get back all the circulated plastic bottles to prevent dumping in the oceans.

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