Greenwashing is the practice of businesses and companies presenting themselves as more environmentally friendly or sustainable than they actually are. This is done for a variety of reasons but is ultimately done to increase sales, revenue, and profit. Though not illegal in most places, greenwashing is frowned upon by almost all of society and is considered immoral.
The most common reason for greenwashing is to increase the culpable companies’ reputation, providing a competitive advantage which encourages customers in the market to shop at that particular business by tricking them into thinking they are being more supportive of the environment. This increases sales and therefore improves the company’s bottom line.
Similarly, having a good brand image allows companies to increase their prices as having a positive brand image decreases the price elasticity of demand (the rate at which demand falls in reaction to an increase in price). This allows companies to increase their prices, improving profit margins and overall profit whilst minimising their loss of sales and market share.
Another reason to greenwash is to save costs. This is because being environmentally friendly can be expensive, and switching to environmentally friendly components usually costs more. Therefore, further increasing profit margins and increasing profit.
Furthermore, greenwashing can sometimes be required to continue operations when laws around your sector compel you to be more environmentally friendly. Examples include energy firms claiming low carbon emissions and exceeding their carbon permits (permits provided by the government which allow a company to produce up to a certain amount in carbon emissions) which can be read about in more detail in this linked article.
Finally, greenwashing can be used to avoid the backlash caused by a negative brand image. Many businesses have failed or been severely damaged because of their environmentally unfriendly actions and as a result, many businesses have attempted greenwashing to avoid this. However, businesses can also be investigated by organisations and found to be greenwashing. If this comes to the public attention, the effects on the business reputation are often much worse as customers don’t like feeling deceived.
Greenwashing unfortunately undermines real acts of environmentally friendly business practices and encourages damage to the environment. This is why greenwashing is so frowned upon and not accepted by most people.
Knowing about and acknowledging the existence of greenwashing is often enough to spot some attempts of greenwashing when used with common sense. However, many businesses have the resources to disguise these attempts so here are some tips to help spot them:
An easy way to find out whether a company may greenwash is by searching online for opinions of third-party organisations as these are often not very biased and easy to access.
Equally, looking for facts and figures instead of buzzwords can be proof of real environmentally friendly actions instead of greenwashing.
Though some aspects of a company may be environmentally friendly, other processes may offset this. Since this is often not well advertised, further research can uncover the truth of whether the company is environmentally friendly or not.
Lawsuits and emission records can often be checked online to help confirm any suspicions of greenwashing you may have.
Though green imagery implies a company is environmentally friendly, it doesn’t necessarily mean they are and is worth looking out for.
Certification from trusted organisations such as Ecocert can often be used as confirmation that a business or product is environmentally friendly.
One of the biggest cases of greenwashing was the Volkswagen emission cheating / Dieselgate scandal. This was when VW was untruthful with the rate of nitrogen oxide pollution of their cars during normal use of the car and as a result, didn’t meet regulations. Though greenwashing is not necessarily illegal, lying about your car’s emission rates and not meeting regulations are, resulting in VW having to recall 11 million cars as well as pay €875m in fines as well as compensation to the vehicle owner. Resulting in VW’s first quarterly loss in 15 years, totalling €2.5bn.
In conclusion, greenwashing is a deceitful practice used by businesses and companies to deceive customers by pretending to be more environmentally friendly than they actually are. To spot greenwashing, it's important to do research and look for facts and figures, opinions of third-party organizations, certification from trusted organizations, and investigate the company's emission records. Though this level of research isn’t feasible to do for every shop you visit, if you can afford to and know otherwise, it is important you shop at businesses that prioritize genuine environmentally friendly practices over greenwashing, for the benefit of both the environment and society.
Thank you for reading and remember to look out for greenwashing.