Even as environment, social and governance (ESG) measures of risk are being politicized in the US, the new European Commission Green Claims Directive will have a significant impact on business and brands – in Europe and across the globe. Understanding the broadening landscape of greenwashing, greenhushing and everything in between is therefore vital knowledge for all brand leaders navigating increasingly complex marketplace challenges.
In the same way there isn’t one definitive way to integrate sustainability and purpose into brand development, there isn’t one form of greenwashing. It comes in many shades, from intentional to unintentional. And yet, because the essential purpose of marketing and communications is to create and sustain preference and demand for a product, service or organization, many activists – and even many in the general public – are fast to call brands out, contending all greenwashing is conscious. In my experience working with brand teams, however, it’s often more a matter of awareness and education than necessarily planned deception.
My core message is that brand leaders who are plugged into the shifting landscape can credibly garner the benefits of embracing sustainability and purpose and create a win-win-win-win for consumers, companies, society and the planet. From providing background on greenwashing to examples of the widening spectrum of instances being called out to highlighting the proposed European Commission Green Claims Directive, I’ve written this piece to support marketing and communications professionals wrestling with a multitude of concerns as consumer and societal consciousness continues to evolve.
If you’re pressed for time, click here to download The Takeaway from the end of this post for five guidelines to help CMOs and other marketing and communications leaders to prevent greenwashing and embrace sustainability.
Greenwashing represents real business risk
Over the past five years, online searches for sustainable goods have soared 71% globally according to The Economist Intelligence Unit. Alongside this, many brand leaders have recognized—albeit to varying degrees—that they can and should play a part in creating a better, more sustainable future. Progressive brands are on a journey to embed sustainability into brand development. Others see going green and doing good as an add-on. And some choose to take advantage of trends without genuinely considering what they really mean.
A recent McKinsey-Nielsen IQ study in the US found products making environment, social and governance (ESG) related claims averaged 28% cumulative growth over the past five-year period, as compared to 20% for products that didn’t make similar claims—or 1.7% CAGR. And according to the European Commission, 53.3% of environmental claims made by brands (across the European zone) were “found to be vague, misleading or unfounded” and 40% “unsubstantiated.” More than 230 different environmental labels across the EU have resulted in confusion and a general lack of trust about claims.
As activists scrutinize corporate activities and governments up regulation, greenwashing has become a threat for green brands and longstanding brands integrating sustainability as much as it has for nefarious actors. A Bloomberg Law review of company filings with the US Securities and Exchange Commission found 14 companies listed on the S&P 500, including BlackRock, Phillips and United Airlines, cited “greenwashing” most often as a business risk in their 10-K annual reports – up nearly three-fold as compared to 2022. Without a doubt, reputational damage of being called out for greenwashing, even when it is unintended, has the potential to be consequential.
Greenwashing is not always bad people doing bad things
Greenwashing as a term was first coined in 1986 by environmentalist Jay Westerveld in an essay describing the hotel industry as promoting the reuse of towels falsely. According to the Oxford English Dictionary, greenwashing is “the creation or propagation of an unfounded or misleading environmentalist image.” In other words, it is misleading or false information or activities that make people believe a company is doing more to protect or regenerate the environment than it really is.
Although it’s easy to assume all greenwashing as heinous, it really isn’t. Many marketers, brand leaders and research and development teams genuinely care about sustainability and are seeking ways to do better and contribute positively to society. Yet, with sustainability and purpose being only one of many disciplines they’re responsible for today, many don’t have the technical knowledge and context of a wider systems perspective of sourcing, production, delivery and/or the end of lifecycle of their products and services.
Both positive and negative impacts, including those buried deep within the supply and end use chains must be considered when determining the efficacy of green claims. And comprehensively identifying a brand’s potential impact on the planet is not easy, especially in companies where sourcing, manufacturing and even compliance sit in silos disconnected from those in marketing and communications.
The environmental impact of paper straws readily illustrates the importance of a wider systems perspective and how intricate green claims can be…. While paper straws eliminate plastic that can end up in the ocean or landfills and typically are biodegradable, they require more energy than plastic straws to produce. Further, the production of paper straws involves the destruction of forests potentially leaving fewer trees to absorb carbon dioxide from the atmosphere. A further caveat adding to the complexity is that paper manufacturers often plant forests so the actual net effect is up for grabs. The jury, therefore, is still out on whether claims that paper straws are better for the environment are valid or not – and in many ways depends on whether you’re more concerned about the impact on the planet of plastic waste or carbon emissions.
Trash bags are another common example demonstrating how tracing the full lifecycle of a product is essential to preventing inexact marketing and promotional statements. It seems apparent that compostable or biodegradable trash bags are green. Yet, when filled with food waste they can be more detrimental to the environment than virgin plastic if they end up in a landfill rather than a composting bin…. Sitting in a landfill, a compostable bag filled with food waste produces harmful methane.
There also are many inherent complexities in supply chain sustainability, and the data that even accredited third parties need to do the math may not be readily available or identifiable. For example, with reducing carbon emissions and net zero top environmental priorities for many organizations, a 2021 BCG GAMMA study uncovered that only 9% of organizations can exhaustively measure their total greenhouse gas emissions. Respondents in the study further estimated an average error rate of 30% to 40% in these calculations. When the scientific evidence is imperfect, the expectation for sustainable messaging to be scientifically verifiable is extremely challenging.
From greenwashing to greenhushing – and shades in between
As more activist groups emerge as watchdogs and measurement systems become more sophisticated alongside increasing regulation, our definition for greenwashing simultaneously has broadened. And in response to this greenhushing – or deliberately being quiet about sustainability goals for fear of being labeled a greenwasher – reportedly is also on the rise. In the wake of the European Commission’s Green Claims Directive proposed on March 22, 2023, it’s safe to guess that more companies now may be thinking that remaining silent about sustainability initiatives is the prudent choice.
Examples of brands greenwashing have been growing every day. Why?
In between greenwashing and greenhushing lies a spectrum of intentional and unintentional (or unaware) actions. While not meant to deceive, unintentional greenwashing is just as dangerous as intentional by eroding trust in sustainability communications overall; overshadowing a brand’s genuine commitment to behaving responsibly and doing good; and, confirming consumers skepticism about the validity of corporate green claims and activities.
Let’s explore some examples….
Some instances of greenwashing are black and white – cases of right and wrong and readily characterizable as unethical. In 2016, a US judge approved such a case and one of the largest corporate settlements on record: $14.7 billion to settle allegations that Volkswagen had irresponsibly used “defeat devices” to alter emission testing for diesel cars promoted as eco-friendly. The brand knowingly programmed diesel cars’ computers to detect and pass emission testing even as the vehicles ejected pollutants up to 40x the U.S. limit.
Nuancing recyclable packaging
Determining if plastic packaging is indeed recyclable can be convoluted and result in even brands focused on doing good making false claims about recyclability of packaging. And it’s not necessarily easy for purchasers to differentiate who is sincere and who is taking advantage of their concerns about the planet.….
In 2019, Surfrider Foundation collaborated with the University of Victoria Law Centre and Eco Justice to file a request with Canada’s Competition Bureau to investigate Keurig Canada’s claims about the recyclability of their K-cup coffee pods. In 2022, the Bureau determined that Keurig’s statements about the recyclability of its single-use coffee pods were misleading or false for two reasons: 1. Outside British Columbia and Quebec, the pods were not widely accepted in municipal recycling programs; and, 2. Some local recycling programs required people to prepare their pods for recycling differently than the way Keurig Canada instructed. Ruling against Keurig Canada, the Bureau fined the brand $3 million and ordered Keurig Canada to donate $800,000 to a Canadian environment-focused charity as well as reimburse them $85,000 for the cost of the investigation. What do you think? Is this an example of intentional or unintentional greenwashing?
Perceiving things differently than activists and purists
With perceptions of what is and what is not greenwashing highly dependent upon our individual consciousness, many examples aren’t as lucid as Volkswagon, or even potentially Keurig Canada. In 2022, for example, the activists network Plastics Rebellion filed a complaint with the UK Advertising Standards Authority (ASA) about claims made in an Innocent Drinks’ advertisement “Little Drinks, Big Dreams.” The ad tells a story with characters singing catchy tunes ultimately about “fixing up” the world.
While Innocent’s group marketing director affirmed at the time that the ad was developed to motivate consumers to become recycling activists and the company’s CEO further asserted it was a platform to share information and what they “learned along the way and hopefully inspiring others,” campaigners argued that it deceived the public and suggested single-use plastic actually can save the planet. Effectively siding with Plastics Rebellion, the UK regulator determined that the ads were misleading and “implied that purchasing Innocent products was a choice which would have a positive environmental impact when that was not the case.” (Curious to judge for yourself…? Here’s a link to the ad.)
Seeing the ASA decision as a call to action, Innocent Drinks has since elevated their group marketing director to their first Chief Marketing Officer with a remit of bringing the marketing and sustainability teams together. Committed to doing good, the CMO courageously has been advocating for clearer guidelines on greenwashing to ensure marketers aren’t “paralyzed by the fear of being called out.”
Relying on certification doesn’t always work
In my book Do Good, I profile Ikea as a brand that people identify as responsibly enriching their lives and highlight how the company necessarily has evolved alongside society’s progressing definition of “a better life” to continually deliver its brand purpose.
Ahead of many of its competitors in terms of sustainability, in 2020, Ikea was accused of greenwashing after the nonprofit organization Earthsight linked the brand’s wood to suppliers that illegally logged in a region in Ukraine during a critical breeding period for lynx and other endangered species. The beech in question had been certified by the Forest Stewardship Council (FSC), which Ikea relies on for sourcing, as do many other brands.
The FSC, which I also profile in my book, is a voluntary forest certification system that sets high standards to ensure forestry is practiced in an environmentally responsible and socially beneficial manner – and aids companies like Ikea to find ethically sourced wood. While Earthsight largely held the FSC accountable for Ikea’s sourcing issues, a number of media pundits and activists have questioned if the brand truly is blameless.
The EU fighting greenwashing and fostering transparency
Aspiring to protect people from greenwashing by making green claims reliable, comparable and verifiable across the EU, in March 2023 the European Commission proposed its Green Claims Directive with a public consultation period for comments by May 25th. A number of people in Europe, the UK and the US have told me they are hopeful the directive – which they think of as a consumer protection act, rather than ESG regulation – also will spur the US to approve stronger regulation around greenwashing.
The proposed EU directive aims at fighting greenwashing and fostering transparency through “reliable information on the sustainability, durability and carbon footprint of [products].” It requires brands to substantiate environmental claims by an accredited third party, making the supporting scientific evidence accessible on a website or via a QR code.
In theory, environmental claims already should be backed up in ESG and/or impact reporting data, however, in practice, this is not always the case. So, reflecting on the EU’s intent to reward companies genuinely improving the sustainability of their products and operations, I can’t help but wonder if the new regulation could have unintended consequences on purpose-driven companies – especially smaller, niche brands. Will the added costs associated with verification make it harder for brands genuinely focused on sustainability and doing good to promote their efforts and, thereby, inadvertently lead to more greenhushing? Or will brands pass these added costs on to consumers, who are already struggling with inflation? Further, and perhaps ultimately, will new statutes aimed at doing good ironically foster an ecosystem that discourages brands from going green by unwittingly reducing the ROI? The outcome has yet to be seen.
Communicating efforts accelerates change
While greenhushing may seem like the easy answer for many companies, it really isn’t. Keeping completely silent may have negative consequences and make your brand appear out of touch and losing relevancy. Even more consequentially, greenhushing slows progress on sustainability and, more specifically, tackling climate change.
When brands communicate their green efforts, they raise the bar for their competitors, suppliers, producers, distributors and other stakeholders along the value chain by establishing sustainability norms. Transparency into how brands are responding to the challenges we face and to how organizational leaders are mitigating existential environmental risks are important for consumers, employees and investors alike…. Whether it’s choosing a product to buy, an employer to work for or a company to invest in, knowing the actions a brand is taking guides us all to make better decisions. Transparency is essential to cultivating trust, and trust is essential for long-term success as traditional models for business are being disrupted by necessity.
As greenwashing moves even more into the spotlight with the proposed European Commission Green Claims Directive, brands will have to scrutinize the veracity and language of current environmental claims. Although many may be tempted to shy away from sustainability communications, especially eco-friendly buzzwords on packaging, there’s no going back.
Once a brand steps on the pathway of purpose and sustainability, an expectation is set with people, whether they are labelled consumers, employees, investors or other stakeholders. Today, it’s essential that a brand demonstrate it is ceaselessly striving to deliver, even as standards for doing so increase.
When working with brand leaders, I have found the challenge in communicating green initiatives efficaciously lies in the concept that traditional marketing training may not always apply. Sincerity and transparency outweigh positivity, benchmarking against competitors and reflecting consumer desires in messaging. And adopting a sustainability mindset and ethos of citizenship across brand, marketing and communications teams is essential.
Here are 5 guidelines (that take into account elements of the European Commission Green Claims Directive) for CMOs, agencies and other brand leaders to help prevent greenwashing:
1. Develop your brand’s sustainability point of view and narrative with transparency, not only positivity, in mind
- Consider if your purpose-driven and sustainability programs are focused on doing no harm – or on doing more good (do the math to identify if you’re having a net positive, net zero or net negative impact in each area that’s material to perceptions of your brand)
- Bring your audiences along the journey with you, communicating what’s validated, evidential and realistic, not an idealized version of reality
- In the same way network and systems security companies sometimes consult with “black hats,” cultivate a dialogue with activists and purists, seeking their perspectives and points-of-view on word choice, messaging and activities alongside those of your target market and other audiences
2. Validate all environmental claims by a matter of policy, ensuring they are truthful, accurate, backed-up by scientific evidence and do not mislead or exaggerate the benefits of a product or service
- Use specific, not vague or general, language supported by clear and prominent information on the environmental impact of the product or service
- Avoid using ambiguous terms such as “eco-friendly” or “green” unless your brand can demonstrate a significant environmental benefit when compared with similar products or services in the same category
- Refrain from using iconography on packaging or in other communications (regardless of their visual appeal) that may mislead people about your environmental impact (on a personal sidenote, I’m hopeful we’ll develop a standard set of symbols or graphics)
3. Take a systems perspective* on sustainability and doing good that extends beyond your product and immediate area of responsibility
- Make sure “your house is in order” and you don’t have any environment, social or governance vulnerabilities across your organization
- Equate sustainability systems and stakeholder mapping with brand touchpoint mapping, assessing the materiality of all sustainability touchpoints and stakeholders and prioritizing the ones that matter most (being aware of the others helps brands respond more effectively in an unanticipated crisis)
- Only make statements that reflect lifecycle assessments that include the environmental and social impact of an entire product or service, including raw materials, production, use and disposal
*NOTE: A systems perspective is a living hypothesis of relationships/interdependencies and feedback loops, actors and trends. Like touchpoint mapping, systems mapping develops a collective understanding of the larger ecosystem in which your brand operates, pressure points that are material and opportunities for innovation, impact and multi-stakeholder collaboration.
4. Leverage your influence to inspire a sustainability mindset and ethos of citizenship with customers, coworkers and other colleagues
- Integrate sustainability training into brand, marketing and communications teams’ professional development
- Evaluate your investment into sustainability programs (including embedding ESG principles) versus communications and marketing
- Reach out across historical silos and unite people across marketing, sustainability, sourcing, production and delivery channels to cultivate greater understanding of material issues, amplify impact and create greater efficiency
5. Celebrate the progress you are making both internally and externally
- As the landscape of rules and regulations continues to shift, emphasize progress over perfection and, as cliché as it may sound, acknowledge you’re on a continuous journey
- Remember internal understanding and awareness of sustainability and a systems perspective is the first step on the pathway to taking action
- Measure outcomes and impacts as well as outputs to benchmark your brand’s progress and report them broadly so that all stakeholders are part of your journey
To learn more about preventing greenwashing and greenhushing, arrange a training session or get support integrating purpose, sustainability and ESG into brand development and organizational culture, please reach out.