What is Greenwashing?
Greenwashing occurs when a business engages in inaccurate, deceptive, or excessively inflated assertions about its environmental credentials. These claims often revolve around the business's environmental or social metrics, involving manipulations such as lowering pollution or energy usage statistics to create a misleading impression of being more 'green,' 'sustainable,' or 'energy efficient.'
Companies may also falsely claim the use of environmentally friendly chemicals or provide misleading information about workers' conditions. Moreover, generic environmental claims using buzzwords like 'biodegradable,' 'eco,' or 'natural' without substantiation can contribute to greenwashing. When such claims, intended to attract stakeholders or consumers, prove untrue or exaggerated, the business is deemed guilty of greenwashing. This can be a deliberate marketing strategy or unintentional misinformation resulting from inaccurate reporting.
Is Greenwashing against the law?
In essence, the answer is yes.
Whether confronted directly or indirectly by legislation, greenwashing fundamentally constitutes deceptive marketing and misrepresentation, an act deemed illegal in most countries. Numerous nations have established either general anti-false advertising legislation or specifically targeted greenwashing laws to address companies that potentially mislead stakeholders through unsubstantiated 'green' claims. The subsequent examples illustrate countries that have implemented either False Advertising legislation or measures against greenwashing.
For Example
The Advertising Law 2021
In China, The Advertising Law 2021 prevents advertisements from containing false or misleading claims when describing the product's quality, production ingredients, purpose, where it was made, etc. Punishments for violations of this law include significant fines.
The Green Claims Code
In the UK, the Competition and Markets Authority (CMA) released The Green Claims Code with accompanying guidance on helping businesses understand greenwashing and ultimately warns companies about the UK consumer protection laws that prevent misleading marketing regulations. In addition to guidance, the UK legislation includes the Business Protection from Misleading Marketing Regulations 2008, which has considerable punitive measures for false advertising, including fines and imprisonment.
The Competition Act, Textile Labelling Act, and Consumer Packaging and Labelling Act
In Canada, there are several pieces of legislation against greenwashing, including the Competition Act, Textile Labelling Act, and Consumer Packaging and Labelling Act, which addresses companies making incorrect or misleading representations. It contains a guide of greenwashing laws and the repercussions for making unsubstantiated claims.
The Misrepresentation Act, the Singapore Code of Advertising, and The Consumer Protection
In Singapore, there are a number of false advertising and consumer protection laws and guidelines related to greenwashing, including the Misrepresentation Act, the Singapore Code of Advertising, and The Consumer Protection (Fair Trading) Act (CPFTA).
Anti-Greenwashing Guide and the Consumer Code
In France, there are several different laws and guidelines that prevent greenwashing. These include the Anti-Greenwashing Guide and the Consumer Code, which prevent misleading advertising. The Climate and Resilience Act directly regulates advertisements relating to greenwashing, fossil fuels, and specific products such as cars with set levels of carbon dioxide emissions. Violation can result in two years imprisonment, fines proportionate to the value of benefits deriving from the advertisement, and information being communicated to the public to tarnish the company's reputation.
Safeguarding consumers against greenwashing
Additionally, recently in the EU, Members of the European Parliament voted 467-65 in favor of passing a set of regulations focused on safeguarding consumers against greenwashing. These regulations include a mandate for companies to undergo verification of product marketing claims, such as "less polluting," before they are permitted to use them.
How to avoid greenwashing?
Having established that greenwashing involves businesses making untrue statements about their environmental metrics, it's imperative to recognize its illegality and stringent regulations.
The question then becomes, how can businesses effectively avoid greenwashing?
To avoid greenwashing, businesses must exercise precision and accuracy in advertising and claims concerning environmental impact. It is crucial to steer clear of vague, incorrect, or misleading terminology, such as 'natural,' 'green,' 'eco-conscious,' and 'sustainable. ' While these buzzwords possess meaning, they need more specificity and clarity, leading to potential misinterpretations. To mitigate this risk, businesses should strive for specificity in their claims, providing a clear understanding of the practices and outcomes they represent.
Additionally, businesses should exercise caution when using colours and imagery in marketing materials. Overuse of green or depictions of nature can inadvertently convey environmental benefits and sustainability, potentially misleading stakeholders.
Ensuring accuracy and transparency in disclosing environmental metrics, such as pollution, water and energy usage, and waste disposal, is paramount. Selective sharing of favourable data that paints the business positively while omitting less favourable information is misleading. Businesses should refrain from manipulating data to present a more favourable image.
Lastly, businesses should refrain from utilizing labels that mimic third-party endorsements unless they have genuinely earned them. Misleading stakeholders through applying a sustainability label constitutes greenwashing and must be avoided at all costs.
Have there been any cases of greenwashing claims against companies?
Yes, many well-known companies have had advertising and campaign claims investigated for potential greenwashing.
This is typically a costly process for companies, as well as damaging to their reputation and product's popularity. Even if a company wins their greenwashing case, there is typically still considerable lasting damage to its reputation and profits.
Automotive Industry, Volkswagen
Volkswagen has had multiple class action suits against them for their "Clean Diesel" advertising campaign.
In this campaign, Volkswagen claimed their vehicles were "low emission" and "environmentally friendly". However, the cars were not low-emission and environmentally friendly; Volkswagen had just used a device that lied about their emissions to make them appear environmentally friendly. This is misleading for consumers, constituting greenwashing in the form of lying directly about a product's environmental metrics.
Volkswagen pleaded guilty to installing software designed to mislead stakeholders and consumers about their environmental metrics and has had to pay considerable fines as punishment of 31.3 billion dollars.
Consumer goods Industry, Amazon
In the consumer goods industry, Amazon's "Aware Range", which was supposedly climate-friendly products, were wrapped in single-use plastic and imported from extremely far away, meaning the importing journey was extremely environmentally unfriendly.
This is greenwashing because a line of products was described in a manner that misled consumers into thinking they were environmentally friendly and sustainable when the products were the opposite.
This discovery seriously damaged Amazon's reputation and legitimacy in the eyes of consumers.
Sports Industry, FIFA
FIFA claimed the Qatar 2022 World Cup would be the "first carbon-neutral World Cup" and committed to reducing and offsetting the World Cup's carbon emissions. In fact, the 2022 World Cup was the most polluting World Cup in history. FIFA incorrectly calculated the carbon emissions by drastically underestimating them and participated in ineffective carbon offsetting schemes.
The Swiss Fairness Commission, a body that receives complaints alleging violations in commercial communication and regulates advertising in Switzerland, received complaints about FIFA's greenwashing from several NGOs based throughout Europe.
After investigating, the Commission found that FIFA's claims were misleading and constituted unfair advertising.
They advised FIFA to refrain from making unsubstantiated statements in the future and to stop claiming that the 2022 Qatar World Cup was carbon or climate-neutral.
Textile & Garment’s Industry, H&M and Decathlon
The Netherlands Authority for Consumers and Markets found that H&M and Decathlon are advertising their clothing collections as environmentally friendly. Terms such as "conscious choice" and "eco-design" were used to describe their clothing but with no details to back up their environmental claims.
The ACM was concerned that the labels were vague and unclear and may mislead consumers to think that the collections are environmentally friendly and sustainable, when in fact, many of the collection pieces had no link to sustainability, nor were the claims substantiated.
As a result of this investigation, H&M and Decathlon removed green labelling from their stores and promised to make large donations of around $500,000 each towards fashion sustainability initiatives.
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