What is Greenwashing and Why is it a Problem?

Greenwashing is a concerning phenomenon that has gained prominence in recent years. This deceptive marketing practice has far-reaching implications for sustainability, leading consumers to believe that certain products or companies are eco-friendly when, in reality, they may be contributing to environmental harm. From food and fashion to cars, cosmetics and packaging, no industry is greenwashing-free.

In this article, I explore the concept of greenwashing, discuss its detrimental effects on customers but also both businesses and the environment, and provide tips for avoiding being misled by eco-friendly marketing claims.

What is greenwashing?

Greenwashing refers to the practice of making misleading or false claims about the environmental benefits of a product, service, or business practice.

It is an attempt to capitalise on the growing demand for environmentally sound products, whether that means they are more natural, healthier, free of chemicals, recyclable, or less wasteful of natural resources. In fact, the organisation spends more time and money on marketing itself as environmentally friendly than on actually minimising its environmental impact.

When was the term “Greenwashing” first used?

The term was originally used for the first time in the 1960s by the environmentalist Jay Westerveld when objecting to hotelier’s practice of placing notices in hotel rooms that asked their guests to reuse towels to “save the environment”.

Westerveld noted that there was little else to suggest that the hoteliers were interested in reducing their environmental impacts and that their interest in washing fewer towels seemed to be motivated by a concern to save costs rather than the environment.

Why is greenwashing bad?

In both consumer and environmental contexts, greenwashing poses a multifaceted problem with far-reaching consequences. Deceptive marketing tactics not only mislead environmentally-conscious consumers but also hinder genuine eco-friendly efforts, impacting both the choices consumers make and the overall health of our planet.

For the consumer:

Greenwashing is deceitful and unethical because it misleads consumers who are genuinely seeking environmentally friendly companies or products. Often, green products can be sold at a premium, making them more expensive, which can lead consumers to overpay.

According to a recent survey conducted in late 2022, over 35 percent of Australian consumers always take sustainability into consideration when shopping and a survey also discovered that 41% of shoppers would be willing to pay more for ethical and sustainable products, companies that use greenwashing are doing it to attract more people and automatically make more profit. Worldwide, more than a third of global consumers are willing to pay more for environmentally-friendly alternatives. 

For the environment:

Greenwashing also takes up valuable space in the fight against environmental issues, like climate change, plastic ocean pollution, air pollution and global species extinctions. When consumers unknowingly support greenwashed products or services, they may inadvertently contribute to environmental harm.

Moreover, genuine eco-friendly companies that prioritise sustainability often suffer due to the deceptive marketing campaigns of their greenwashing competitors.

The Impact on Businesses

Engaging in greenwashing can lead to severe consequences for businesses, first of all, its reputation can be damaged. Once exposed, companies risk reputational damage, loss of customer trust, and declining sales. Customers today are more socially conscious than ever before, and they value authenticity. Therefore, it is essential for companies to align their marketing claims with genuine environmental efforts to build a loyal customer base.

Australian Regulation

The good news is that companies making false green claims in Australia are beginning to get penalised by corporate regulators. The Australian Securities and Investments Commission (ASIC) is monitoring the market to take enforcement action against greenwashing, including court action.

The Australian Competition and Consumer Commission (ACCC) has also launched an internet clean targeting misleading environmental claims across a wide range of businesses. They created a link where everyone can report their experience.  Both commissions are seeking to introduce standardisations for greenwashing.

Differentiating CSR from Greenwashing

Corporate Social Responsibility (CSR) is a legitimate and commendable initiative where companies take responsibility for their social and environmental impact. Unlike greenwashing, which focuses on superficial marketing tactics, CSR involves genuine efforts to reduce a company’s environmental footprint and contribute positively to society.

Avoiding Greenwashing: Best Practices

To steer clear of greenwashing, companies must be transparent in their sustainability claims. They should back up their marketing campaigns with concrete data and certifications from recognised environmental organisations. Third-party certifications, such as LEED or B Corp, can validate a company’s green initiatives and help consumers make informed choices.

Greenwashing is of huge concern to the environmentally conscious. As the renewable energy industry continues to make strides towards a greener future, we must remain vigilant against deceptive advertising practices that threaten sustainability efforts. The best short-term action for tackling greenwashing is to build awareness about it.

Being aware of the pitfalls of greenwashing empowers us as consumers to make informed decisions and support genuinely eco-friendly businesses. Likewise, companies must embrace genuine sustainability practices and communicate transparently with their customers to build trust and drive positive change.

Together, we can create a more sustainable world, where greenwashing has no place in the journey towards a cleaner and greener future.