What is Greenwashing? A Guide for Entrepreneurs and Shoppers

Whether it’s Starbucks or Exxon Mobile, more and more industries are being called out for greenwashing. But what is greenwashing really? Where does the term come from, and why is it such a hot topic?

Greenwashing refers to companies inflating the environmental benefits of their products or services. In moderate cases, they may just exaggerate a bit. In extreme instances, however, they engage in deliberate misinformation. Some companies evenflat-out lie about their carbon impact.

And as the spotlight shifts to business owners to help curb climate change, industries across the board are touting net-zero pledges and (sometimes questionable) sustainability certifications.

So, how do we become more savvy to these techniques? In this article, we’ll discuss the origins of greenwashing, present-day examples, and what you can do to avoid it both as a consumer and a business owner.

Why is Greenwashing Becoming More Prevalent?

The reason for the surge of greenwashing cases is simple: brands are being pressured to lessen their environmental impact, more now than ever before.

Why? Consumers demand it. According to a Collage Group survey, 57% of Americans believe corporations operating more sustainably is the best way to address Climate Change. Additionally, GreenPrint’s 2021 Business of Sustainability Report states that 77% of Americans are concerned about the impact their purchases have on the environment.

Consumers aren’t the only ones pushing for sustainable business practices. Stakeholders are more likely to invest in companies trying to lower their carbon footprint (sometimes regardless of if their eco-friendly claims are truthful or not).

What is Greenwashing in Advertising?

In order to better understand where it all started, let’s explore the advertising boom in the 1960s and how it led to the greenwashing we see today.

The Evolution of Advertising and Greenwashing

The 1960s was a pivotal time for advertising. More young people had disposable income and the freedom to use it how they saw fit. As a result, the demographic became the ideal target for big business.

This led to a sudden explosion in television and print marketing, marking the decade as the “Golden Age of Advertising.”

Not all marketing during this period was deceptive, but there were a fair share of misleading claims. (This includes the idea that sugar was a health food, which led an entire marketing campaign.)

The sudden flurry of advertising also paved the way for greenwashing. One key example comes from the nuclear power plant, Westinghouse.

Fueled by events like the 1962 Cuban Missile Crisis and atomic testing, Americans were apprehensive about the safety of nuclear energy. In an aim to quell public anxiety, Westinghouse initiated a new marketing campaign, asserting that nuclear energy was entirely clean and safe—for people and the environment.

In reality, nuclear energy still had many potential safety risks, unsolved waste disposal issues, and long-term environmental concerns.

Decades later in the 1980s, ecologist Jay Westerveld noticed a hotel was encouraging patrons to reuse their towels to help save water and the planet. Although the real reason had nothing to do with the environment—it was simply to lower laundry costs. Unimpressed, Westerveld wrote an essay on the subject and officially coined the term “greenwashing.”

Greenwashing Today: Common Tactics to Look Out For

The internet has made greenwashing more common. What’s more, marketing has become more sophisticated. Some companies are able to leverage subtle methods to skew the public’s perception of their product.

Here’s where it gets dangerous: lying about environmental benefits allows businesses to charge a premium price. So, not only are customers buying a product that conflicts with their intentions, but they’re also paying more for it.

Don’t be fooled by companies that value profit over truth. Here are some of the most common greenwashing tactics to keep an eye out for:

1. 1. Misleading Vocabulary: Using ambiguous terms—like “eco-friendly”, “sustainable”, or “green”—that lack specific, verified environmental certifications is a common greenwashing tactic. For example, a cleaning product could be labeled as “all-natural,” but it contains harmful chemicals, and the company provides no evidence of independent eco-certifications.
   2. Irrelevant Claims: This is when a company makes environmental claims that are technically accurate but irrelevant to the product’s true impact. An example of this would be a car manufacturer that promotes its vehicles as “low emissions” without acknowledging the larger, high-emission SUVs it sells.
   3. Green Packaging: Some businesses will center their brand around being “clean” or “green,” using minimalist packaging and environmental symbolism. Green symbols aren’t regulated, so they can be used inauthentically.
   4. Unverified Carbon-Neutral Claims: Becoming carbon-neutral is the ultimate goal for many industries. However, this is incredibly difficult to achieve. Be wary of companies that claim to be almost or completely carbon-neutral, but lack sufficient evidence to support their claims.
   5. Hidden Trade-Offs: This involves highlighting a single eco-friendly aspect of a product in order to downplay its actual environmental impact. For instance, a beverage company could advertise its bottled water as “eco-friendly” because the bottles are made from recycled plastic, ignoring the harm caused by single-use plastics.
   6. False Certifications: This involves displaying false or misleading eco-labels, certifications, or endorsements that haven’t been verified by credible third-party organizations. For example, a clothing brand could display a logo that resembles a recognized organic certification but is not backed by any reputable certifying body.

Greenwashing Examples: Industries in the Hot Seat

Although greenwashing is clearly deceptive, it’s still not always illegal. In fact, the legality of making inauthentic environmental claims is still murky.

The Federal Trading Commission (FTC) is looking to further crack down on greenwashing. At the same time, they’re dealing with budget constraints and first amendment concerns from the National Federation of Independent Business.

Let’s take a look at some industries that have recently been involved in class action lawsuits.

Consumer Packaged Goods (CPGs)

The items we most frequently use like toothpaste, disposable electronics, food and beverages, and cleaning supplies are responsible for 60% of greenhouse gas emissions.

Coca-Cola, in particular, has been the subject of two lawsuits.

One was filed by Earth Island, an international environmental organization, in response to a tweet by Coca-Cola which stated, “Business and sustainability are not separate stories for The Coca-Cola Company—but different facets of the same story.”

They allege that Coca-Cola shouldn’t be able to label themselves as sustainable, while simultaneously producing single-use plastics at a massive scale.

Another environmental organization, Sierra Club, sued the industry giant as well. They asserted that Coca-Cola’s claim that they have 100% recyclable bottles is misleading, since a large majority of plastics end up in landfills even if they are recyclable.

Coca-Cola won both class action lawsuits.

For Earth Island’s lawsuit, they won on the grounds that their sustainability claims were goals, not promises. The federal judge for the Sierra Club lawsuit believed it was up to the consumer to understand the implications of the word “recyclable.”

Fast Fashion

The fast fashion industry is harmful to the environment and filled to the brim with greenwash marketing. H&M is one fast-fashion brand that was recently involved in a proposed class action lawsuit. Large fashion companies are a major culprit, with a Synthetics Anonymous report stating that 60% of their sustainability claims are greenwashing.

The lawsuit alleged that the retailer’s “Conscious Choice” line of products misled consumers by using the terms “conscious” and “sustainable” in its marketing. The plaintiffs claimed that H&M’s campaign violated California and Missouri consumer protection laws, as well as the FTC’s Green Guides for environmental marketing claims.

Ultimately, a federal judge dismissed the proposed lawsuit. His decision was based on the finding that H&M’s use of the term “sustainable” was appropriately qualified with statements about the use of sustainable materials, such as organic cotton or recycled polyester. Thus, he stated these claims were accurate and not misleading.

The court did not scrutinize the underlying environmental impact calculations.

Air Travel

Delta’s been under scrutiny of greenwashing ever since they declared themselves to be “the first carbon-neutral airline.”

They accredit this to their carbon offsetting initiatives. Carbon offsetting is the practice of compensating for greenhouse gas emissions by investing in projects that capture an equivalent amount of carbon dioxide from the atmosphere.

In 2023, a frequent Delta flyer is suing the company, alleging their carbon-neutral claim isn’t truthful, as it relies on questionable carbon offsets.

Delta contends that the suit lacks legal merit, stating its focus on sustainable aviation fuel since March 2022. The plaintiff, Mayanna Berrin, claims that thousands of travelers may have paid extra for Delta flights based on the false climate stance.

The suit criticizes the efficacy and credibility of carbon offsets, citing concerns about their environmental impact and permanence. Other companies like JetBlue and Lyft have reportedly moved away from using carbon credits due to similar concerns.

What is Greenwashing Doing to Consumer Attitudes?

When deceitful businesses muddy the waters, it makes it harder for well-intending consumers to make informed choices.

Greenwashing can confuse shoppers as they struggle to differentiate between genuinely eco-friendly products and deceptive ones.

When consumers believe that companies are not sincere in their sustainability efforts, they may become less motivated to make eco-friendly choices, feeling that their efforts are futile. Thus, greenwashing can divert attention away from companies that are genuinely committed to sustainability.

How Businesses Can Stop Unintentional Greenwashing

It’s common for well-meaning brands to unintentionally greenwash. It can be tempting to believe you’re further along on your eco-journey than you actually are. But in reality, honesty is the best policy. Being absolutely clear and transparent on your environmental standing is not only the morally right thing to do, but it will increase credibility and trust with your audience.

Other areas to pay special attention to include:

1. Value depth over fluff. Offer comprehensive information about environmental practices and policies. Transparency, backed by evidence, lends credibility to claims. Greenprint’s 2021 Business of Sustainability Index notes that 45% of Americans need third-party validation to trust a business.
2. Authenticity in Sustainability Initiatives: True sustainability requires a genuine, long-term commitment. Businesses must integrate eco-friendly practices into their core operations, not just their marketing.
3. Verifiable Metrics: Companies should provide measurable data that support their green initiatives. Metrics on emissions reductions, energy efficiency, or waste reduction can speak louder than vague statements.
4. Avoiding Hyperbole: Companies should use modest language in their claims, avoiding hyperbolic expressions that exaggerate their environmental impact.
5. Long-Term Commitment: Acknowledge that sustainability is an ongoing process, not a one-time effort. Businesses should evolve their practices continually.
6. Collaboration and Stakeholder Engagement: Partnering with environmental organizations, experts, and stakeholders can validate a business’s green initiatives.

How Consumers Can Spot Authentic Brands

If you want to make more sustainable choices as a consumer, you may be feeling overwhelmed. But there are ways to know whether or not you can trust a business:

1. 1. Research and Transparency: Look for detailed information about a company’s sustainability efforts. Transparent reporting on environmental practices and goals can indicate genuine commitment.
   2. Third-Party Certifications: Certifications from reputable organizations like Fair Trade, USDA Organic, or ENERGY STAR can be a reliable indicator of a brand’s commitment to sustainability.
   3. Track Record: Evaluate a brand’s historical environmental performance. Companies with a consistent track record of sustainable practices are more likely to be trustworthy.
   4. Customer Reviews and Independent Sources: Seek out reviews, testimonials, and articles from independent sources to gauge public perception and expert analysis.

It’s important to note that while evaluating a business, don’t be too critical. It’s better to buy from an imperfect brand that’s actively trying to be sustainable than one that isn’t at all.