The Harms of GreenwashingBY MICHÈLE FAVORITE*
- 5 December 2023
- Posted by: Competere
- Category: Senza categoria
The greenwashing phenomenon causes damage on multiple fronts. On the consumer side, it manipulates the choices of those seeking sustainable products and services, damaging consumer trust in companies (trust already undermined in many sectors). On the business side, it creates unfair competition for sustainable enterprises, increases the risk of reputational damage, raises the cost of capital, and the likelihood of sanctions and legal action (which are exponentially growing worldwide). In short, greenwashing is an example of a lose-lose situation (the opposite of win-win).
A GROWING PHENOMENON
Greenwashing is spreading more and more, exploiting the growing consumer desire to buy sustainable products and services. According to a 2022 IBM Business Value study, 51% of surveyed consumers in 10 countries stated that sustainability is more important to them than in the previous 12 months, and 49% claimed to have paid a premium for sustainable products. According to Bloomberg estimates, within three years, one in three dollars will be invested based on environmental criteria.
It is no coincidence that companies seize this great opportunity to give a green sheen to their activities and products, even with untruthful marketing. In 2020, a survey published by the European Commission on marketing from EU companies revealed that 53.3% of the examined environmental claims were too “vague, misleading, or unfounded,” and 40% were “completely unfounded.” Last October, Reuters reported a 70% increase in global greenwashing cases in the financial sector in 12 months.
DIFFERENT TYPES OF GREENWASHING
Consumers are often inundated with messages and slogans making various claims. From products declaring to “be more sustainable” to those claiming to “be less harmful to the environment,” and those promising to “include only natural ingredients,” some even displaying labels with a “100% eco-friendly certification” (which, however, lack actual guarantees from bodies overseeing such matters).
Greenwashing often creates confusion about the production phase of a product. Can we truly certify a product as green if its value chain includes stages with high fossil energy consumption and consequently a high CO2 footprint?
Many companies opt for Net Zero, allowing them to offset their emissions through alternative initiatives, such as planting trees. While this strategy can yield excellent results, it often takes precedence over actual emission reduction. Furthermore, Net Zero goals are long-term, often targeting 2050, thus exonerating companies in the short to medium term.
In the food sector, greenwashing occurs mainly in three ways: through idyllic descriptions of animal farming methods, which are often intensive; through announcements of natural and organic ingredients lacking certifications; and with Net Zero slogans, which in many cases do not consider the true impact of small activities that make up the entire value chain of the final producer. An example: the world’s largest meat processing company in Brazil emits more methane than Spain through thousands of local micro-farms, yet claims to be Net Zero.
HOW TO COUNTER IT
The much-anticipated breakthrough comes with the European Union’s Green Claims Directive, which aims to regulate environmental statements, the so-called green claims, not only from EU companies (of all sizes—except those with fewer than 10 employees—and all sectors) but also from those selling products within the EU. The directive aims to regulate any environmental aspect of a product or service, such as carbon footprint, energy efficiency, recycled material content, or impact on biodiversity.
Thanks to this directive, the greenwashing phenomenon could truly start to be contained, creating a series of benefits for both consumers and companies. In short, it could be a win-win breakthrough.
*Michèle Favorite is currently Professor at John Cabot University, teaching Corporate Communication, Public Relations, and Integrated Marketing Communication. Previously, she spent ten years at ENI, holding various roles in communication and media.
Image credits: courtesy of Future Learn >>>