Climate activists are increasingly using the term “greenwashing” to denounce some questionable marketing practices. As their influence grows, getting publicly accused of greenwashing can lead to critical negative consequences for businesses.

Find out what greenwashing really is, why businesses mustn’t fall into this trap, and how to do so.

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What is greenwashing?

Greenwashing is a fraudulent marketing method that tricks consumers into believing that a company's activities or products are suitable for the environment. Companies that engage in greenwashing create a misleading image of environmental responsibility and sustainability, while failing to take sufficient climate action to back up their claims.

Since it can be confusing, let’s analyze a recognized example of greenwashing to better understand what defines it.

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In this advertisement, Shell uses various techniques in this advertisement to persuade customers that buying this product aligns with sustainable living.  The green background and the green recyclable icon convey a false sense of nature. They claim to use sustainable packaging in big letters while using standard plastic packaging, with only 40% recycled plastic and no guarantee it is recyclable. Finally, Shell assures that this product is carbon neutral, encouraging consumers to prefer their product over other alternatives and ensuring customers that they shouldn’t worry about the environmental impact of this product when buying.

This is the perfect example of “greenwashing”. Using misleading information to promote a product that negatively impacts the environment as “eco-friendly”.

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While the term “greenwashing” is relatively recent, these nefarious methods have been used for decades by multiple industries intentionally. However, greenwashing can also be done unintentionally.

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Unintentional greenwashing

What is unintentional greenwashing? When a company believes that its actions are beneficial to the environment and promote it, while the actual impact of the company could be more effective. The intention of the company isn’t to mislead its customers in the first place, but the lack of knowledge of its environmental footprint leads to unintentional greenwashing.

Unintentional greenwashing can be easy to commit. Indeed, according to a new BCG GAMMA survey, only 9% of companies can comprehensively measure their carbon footprint. As a result, most companies misrepresent their sustainability commitments, contributing to greenwashing and risking negative consequences.

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As we said in previous Academy articles, measuring its carbon emissions is the first and most crucial step in a company’s sustainability journey.

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What are the costs of greenwashing?

Now that protecting the environment has become a global issue promoting a product as sustainable makes it easier to sell. In fact, studies show that people are increasingly becoming more sensitive to the environmental impact of their shopping decisions.

While this is a good sign for the environment, abusing the eco-awareness of consumers will ultimately counter its positive aspect. Furthermore, it will lead to mistrust of customers, who will become overly suspicious.

In the future, it will be more difficult for truly sustainable products and companies to be recognized as such. Greenwashing removes all meaning from the term "sustainability".

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In the short term, being accused of “greenwashing” can also have highly negative business consequences, especially for mid-market companies which don’t have the means of big enterprises to smooth their public image and reputation.

So, as a business, it is crucial to learn how to avoid greenwashing.

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How to avoid greenwashing as a business?

In 2020, a group of Norwegian activists published an article criticizing greenwashing practices in their country. The piece got viral and led to the publication of a guide against greenwashing, which was widely supported. We used this guide as a baseline and recommend you to read it when you have more time.

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1. Avoid the use of catch-all terms

Classic greenwashing ads always use vague terms like “eco-friendly”, “natural” or “green” which don’t have a clear definition and aren’t backed by facts but meanwhile will provide a sense of sustainability to the consumer. Avoid using luxurious nature pictures or green backgrounds (remember Shell’s example) to better serve your marketing.

Being honest and renouncing unethical practices as such is the best way not to contribute to greenwashing.

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2. Be transparent about carbon emissions and environmental impacts

Again, there is nothing better than being honest. Companies admitting that they still need to make some efforts to reduce their environmental impact are playing the right way, and consumers are responding to it.

Being transparent and not trying to appear perfect by under-communicating negative impacts will increase consumers’ trust in companies’ commitments over time. The first and most crucial step is to report on carbon emissions, from scopes 1 to 3.

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3. Don’t consider offsets and partnerships as a buy-out

While carbon offsets, tree planting projects, and other carbon removal projects are essential to achieving net zero, they are still too often seen as a miracle solution. Claiming a product is “carbon neutral” through uniquely buying carbon offsets is like selling “nicotine-free cigarettes because they paid someone else to sell some chewing gum" (quote here).

Companies should consider the use of offsets as an addition to their efforts to reduce emissions. In fact, the GHG Protocol (the standard for climate reporting) recommends reporting offsets separately from an actual reduction in carbon emissions.

Avoiding carbon offsets and environmental funding as a buy-out is crucial to prevent greenwashing and critics from consumers. Again, being transparent and not trying to trick people is vital. Instead, accurate climate reporting and transparency are keys to effectively reducing emissions.

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4. Don’t base sustainability commitments on marketing strategy

If a company only focuses on sustainability when marketing benefits it, the company may not be considered honest in its claim to fight for a better environment. This will lead to distrust from customers, partners, and potential investors.

Any company should focus on creating an accurate sustainability plan based on its carbon footprint. Later, companies can communicate their achievements, climate ambitions, and plans to succeed. Not the other way around, or they risk being accused of greenwashing.

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Start measuring your carbon footprint and make your company greenwashing-proof by showing tangible proof of your commitment toward a more sustainable future. Book a demo.

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