Greenwashing: why now is the time for action

Greenwashing is one of the biggest ESG challenges facing businesses today, and it’s an issue with which every business leader will be familiar. 

The stakes couldn’t be higher. 

Customers want to buy products that are sustainable. For example, 60-70% of customers would pay more for a product with sustainable packaging, 70% say that would pay a premium for sustainably produced goods, and 77% of customers say they’d stop buying products from a company that had been found guilty of greenwashing.

Almost half (47%) of UK consumers, meanwhile, say they consider a company’s purpose when making a decision, to buy, and 68% will abandon a product or business that acts inconsistently with its purpose. 

Across the world, meanwhile, we’re seeing prosecutions for companies – and executives – who’ve deceived and misled customers, markets and shareholders alike with ‘green’ claims. While intentions may not always be malicious, they can be deliberate – underlined by the fact that research shows 59% of global executives admit to overstating or inaccurately representing their sustainability efforts. 

Pressure from shareholders to deliver profits is high, and the opportunity to align with customer demand is significant. In one survey, 82% of respondents agreed with the statement: “I wish our board or senior leadership gave us more room to prioritize sustainability.”

In response, authorities globally are cracking down and introducing greenwashing regulations such as the Green Claims Directive and the Ecodesign Legislation in the EU, while in the US, Wall Street’s top regulator has also announced new rules on deceptive and misleading marketing practices.

Greenwashing isn’t the only challenge 

While greenwashing is the headline maker, there are a number of subsets that businesses need to be mindful of to avoid greenwashing claims.

Greencrowding Hiding behind the collective efforts of others to avoid scrutiny or responsibility for unsustainable practices. For example, the top five worst plastic polluters in the world are members of The Ellen MacArthur Foundation.  

Greenlighting When companies emphasize a small, environmentally friendly aspect of their operations or products to divert attention from other, less eco-friendly practices or activities.

Greenshifting Shifting the blame for environmental issues onto consumers rather than taking responsibility for their unsustainable actions.

Greenlabeling The misleading use of terms such as 'green’ or ‘sustainable’ to make products or practices appear more environmentally responsible.

Greenrinsing Adjusting ESG (Environmental, Social, and Governance) targets to give the appearance of progress without achieving any targets.

Greenhushing Hiding or under-reporting sustainability efforts to avoid negative feedback from consumers, investor scrutiny, high costs, or regulatory requirements. It’s important to remember, too, that when working with a supply chain, suppliers’ environmental claims can be passed on to you. For example, if a supplier states its product is carbon neutral, and you repeat that without verifying the evidence, you can be seen to be greenwashing.

The need for verification to avoid greenwashing claim 

Companies that are accused of greenwashing could face major issues, ranging from legal action to the possibility of reputational damage and a decline in sales. 

There is a clear opportunity for them to guard against such accusations by having their initiatives and claims independently verified. Many are already aware of this opportunity. Eighty-seven per cent of executives are looking to incorporate better measurement into their organization, while 84% believe their sustainability initiatives would be more effective if they had better structure and clear accountability. 

Education about how to verify claims, and why it’s important not just to take brand messages at face value, is key. 

 Brands that can lead the way in independently verifying their ESG claims can create a genuine point of difference in an incredibly crowded – and often confusing – marketplace and can ultimately play their role in accelerating progress towards a sustainable world.