Greenwashing is the term used to refer to the deceptive or misleading practice by a business or brand of marketing their products, policies, or practices as environmentally friendly when they are not. The word combines "green", usually associated with environmentalism, and "whitewashing", which means covering up or glossing over negative information. It gives the false impression that the brand is ethical in ensuring its environmentally sustainable practices.

The term originated in the 1960s and referred to one of the most blatant examples of greenwashing created by the hotel industry. Hotels placed notices in the rooms asking guests to reuse their towels to save the environment. As a result, the hotels enjoyed the benefit of lower laundry costs [1]. The environment was used as a front for increasing the profits of the different hotels.

 

With the increasing impact of climate change and the need for many businesses to reduce their carbon emissions and act responsibly to the environment, the term is re-surfacing as businesses and brands attempt to position themselves as champions of the environment. A recent example is the case of Coca-Cola, which was named the world’s biggest plastic polluter in 2022. Yet they were the sponsors for the United Nations’ annual 12-day climate summit, COP 27, which was promoted as an opportunity for heads of state to take stock of climate progress and (hopefully) accelerate action.

 

In Australia, a recent survey by the Australian Consumer and Competition Commission (ACCC) found that 57 per cent of the brands it reviewed were making misleading statements by greenwashing.

 

Does greenwashing matter?

Does all this greenwashing matter?

 

It is detrimental and destructive to consumers and other businesses doing the right thing in their practices and, ultimately, the environment.

 

1.  Impact on consumers

In a previous article, we wrote about brands' challenges in 2023. One of these challenges was building and retaining trust with customers.

Greenwashing breaks the trust of customers because it misleads them. The ACCC Chair, Gina Cass-Gottlieb, stated:

“False or misleading claims can undermine consumer trust in all green claims, particularly when consumers often pay higher prices based on these claims [2].”

 

Greenwashing confuses and misleads consumers who want to make environmentally responsible choices. As a result, they may end up purchasing products with little or no environmental benefit, thinking they are contributing to sustainability when they may be contributing to environmental issues.

 

Consumers have become more interested in and committed to sustainable brands as they have become more aware of how production impacts the environment. According to a sustainability report completed by Nielsen’s IQ, 73% of millennials are more likely to purchase a product if it is environmentally friendly and sustainable.

 

Greenwashing misleads and breaks the trust of customers.

 

2.  Impact on businesses and brands who are doing the right thing.

When consumer trust and confidence are lost, it impacts all businesses, particularly those businesses and brands doing the right thing.

When customer confidence and trust are broken, customers may be less likely to support genuine eco-friendly initiatives in the future, thinking that all environmental claims are dubious. As a result, skepticism about genuinely eco-friendly products impacts all brands, making it difficult for truly sustainable companies to differentiate themselves and highlight their ethical practices.

3.  Impact on the Environment

Greenwashing has a detrimental impact on the environment by delaying real progress in addressing pressing environmental issues because of the confusion and lack of trust that is created. Consumers may believe they support eco-friendly practices when in fact, they may be supporting unsustainable business models.

Greenwashing also wastes resources, as companies spend and invest in misleading marketing instead of implementing and supporting genuine sustainability initiatives that could positively impact the environment.

One of the consequences of wasted resources is that there may be a slower transition to a more sustainable economy and inhibit meaningful progress in combating climate change.

Addressing greenwashing matters. It matters for consumers and clients. It matters for businesses and brands who are managing their environmental responsibilities ethically, and it matters for the environment. The ACCC recognised the negative impact of greenwashing and has released the Environmental and Sustainability Draft Guidelines for Business in Australia. These draft Guidelines outline eight principles businesses can follow when making environmental and sustainability claims.