Sustainability-focused products and services have become increasingly popular in Australia. Now, it comes with an issue of businesses overdoing it for more profits. They may need to rethink their environmental commitments.
Business owners must follow the rules to avoid saying untrue things that might trick people. This helps to keep customers’ trust and ensures everything is transparent and open.
But in the meantime, how to avoid greenwashing? How do we as a society avoid greenwashing?
Today’s blog will outline tips and strategies to avoid greenwashing by prioritising honesty and precision in marketing.
Steering clear of ambiguous green symbols and all-encompassing terms and maintaining balanced communication ensures a commitment to ongoing improvement and accountability.
The first step to avoid greenwashing is to understand it thoroughly.
So, What is Greenwashing?
Greenwashing is when a company says its products or business is good for the environment, but it’s not true. They might use tricky marketing to make people think they’re doing good things for the planet.
For instance, a fast-fashion brand might lie about using recyclable materials, or a water bottle company might show pretty green nature pictures to make you think they’re eco-friendly.
Sometimes, companies do this without realising it because they need help understanding the rules. If a business wants to help the environment, they should be honest in advertising about what they’re doing to reduce their impact.
What is Greenwashing in Business
Greenwashing in business means the same thing that was mentioned earlier
Regarding investments, ‘greenwashing’ is when companies pretend their financial products or investment plans are more environmentally friendly, sustainable, or ethical than they are. It can trick people who want to invest in things that are good for the environment.
Greenwashing messes up the critical information investors need before making smart investment choices. It can make investors lose trust in the market for sustainable products and be a problem for a fair and well-working financial system.
How Greenwashing Harms A Brand’s Reputation
Greenwashing has more outcomes than just harming your reputation. Its risks can be categorised into four main areas.
The primary issue is the direct harm to the environment. Furthermore, greenwashing negatively affects society and the role your business plays in it.
Additionally, companies engaging in greenwashing face both financial and legal consequences.
Environmental Impact of Greenwashing
Greenwashing directly harms the environment by exploiting consumers. Their interest in paying extra for products tagged as “environmentally friendly” controls them. This demand for genuine green products is manipulated by successful greenwashing.
Making real efforts to be environmentally friendly requires spending much on research and development.
However, pretending to be green (greenwashing) also costs significant resources. Suppose the resources used for misleading practices were used for genuine research and development.
It could have positive and long-lasting effects on the environment, the economy, and the businesses participating.
Greenwashing Breaks Social Trust
For any business, it’s essential to keep the public’s trust. Doing fake, environmentally friendly things can harm a company’s reputation. Studies show that companies caught greenwashing face serious harm to their image. It can lead to bad reviews, angry comments on social media, people talking badly about the company, and the media looking into it.
The problem is that when a few big companies get caught greenwashing, people distrust any company that says they’re doing good for the environment.
Also, some companies doing good things for the environment might not discuss it because they fear being accused of greenwashing. This fear makes them refrain from promoting their efforts. It later hurts awareness and education about environmental issues.
Potential Legal Consequences of Greenwashing
When watchdog groups catch businesses greenwashing, they can call for investigations. Local and federal agencies may also initiate inquiries if they suspect a company has violated environmental regulations.
Even if no violations are found, the stress of the investigation can be significant, and public accusations can damage a brand’s image.
In the worst-case scenario, companies making false claims about their products may face costly litigation.
Financial Consequences of Greenwashing
The most evident impact of greenwashing on businesses is its potential to damage revenue. Beyond the direct loss in sales due to negative public perception, companies also bear the expense of the marketing campaign that triggered the problem.
Additionally, some businesses may face litigation costs, damages, and potential boycotts from significant consumer segments.
Loss of B2B partners is another consequence, as companies with a genuine green reputation may avoid association with those accused of greenwashing.
It can slow the formation of partnerships and deter potential investors. Furthermore, when lenders scrutinise a company’s history, past lawsuits or scandals may increase the perceived risk, leading to higher financing costs.
10 Tips to Avoid Greenwashing As A Consumer
Avoiding greenwashing as a consumer in Australia involves being vigilant and informed. Here are some tips:
Research Brands: Look into the environmental practices of the brands you are interested in. Visit their official websites and read about their sustainability initiatives.
Check Certifications: Look for third-party certifications from reputable organisations, such as the Australian Certified Organic label or the Carbon Neutral certification. These certifications often indicate genuine environmentally friendly practices.
Read Labels Carefully: Examine product labels for specific information about sustainability claims. Be cautious if the brands are vague or use terms like “eco-friendly” without providing details.
Investigate Company Practices: Research a company’s overall environmental policies and practices. This includes their waste management, energy usage, and supply chain transparency.
Scrutinise Marketing Language: Avoid overly optimistic or vague language in advertising. Companies engaging in greenwashing typically use terms like “green,” “natural,” or “eco-friendly” without substantiating their claims.
Look for Evidence: Seek evidence of a company’s sustainability efforts. Legitimate companies usually provide data, reports, or case studies demonstrating their commitment to environmental responsibility.
Compare with Competitors: Compare the environmental claims of one brand with others in the same industry. It may be a red flag if a company’s shares seem significantly better or more extensive without a reasonable explanation.
Stay Informed: Keep yourself updated on environmental issues, regulations, and certifications. This knowledge will empower you to make informed choices and identify deceptive claims.
Support Transparent Brands: Choose brands that are transparent about their sustainability practices. Companies that openly share information about their environmental impact are more likely to be genuine in their efforts.
Share Information: Share your findings and experiences with friends and on social media. This helps raise awareness and pressures companies to be more transparent and accountable.
You can become a more discerning consumer and contribute to holding companies accountable for genuine sustainability efforts.
How to Avoid Greenwashing As a Business?
There are several strategies to reduce the risk of doing greenwashing:
Use Specific Language: Avoid vague terms like “green” or “all-natural.” Specify the aspects that are environmentally friendly to prevent misunderstandings.
Prioritise Transparency: Provide accessible evidence, such as certifications or accreditations, to support sustainability claims. Transparency builds trust, and concealing information can raise suspicions of greenwashing.
Be Careful of the Imagery: Ensure that visuals associated with your brand are not misleadingly suggestive of environmental friendliness. Select images that accurately represent your products and values to avoid creating false impressions.
Align Claims with Values: Ensure consistency between sustainability claims and your company’s practices and values. Promoting eco-friendly products while engaging in harmful practices can act as greenwashing.
Avoid False Statements: Refrain from making untrue green claims solely for marketing purposes. Steer clear of using fake accreditation logos, as misleading information damages credibility and authenticity.
Substantiate Claims with Data: Support your environmental claims with verifiable data, preferably from reputable third-party organisations. For instance, if your products use organic materials, cite credible sources like the Sierra Club or Greenpeace to validate your assertions.
Compare Similar Products: When making product comparisons, compare similar items. Avoid misleading comparisons, such as contrasting your bamboo cups with another company’s T-shirt line, to maintain transparency and credibility.
Effects and Examples of Greenwashing
More companies engage in greenwashing than one might realise. As per an Akepa report, 60% of sustainability claims made by fashion brands are considered greenwashing, with 42% of companies exaggerating, falsifying, or misleading about their sustainability credentials.
Here are some examples of companies caught greenwashing:
H&M Clothing Brand:
Marketed a “green” men’s shirt as “100% organic cotton,” but critics questioned its environmental friendliness, considering the significant water usage in cotton production.
We introduced paper straws in 2018 for eco-friendliness, but these straws were too thick for recycling plants to process effectively.
Promoted a supposedly recyclable garbage bag, leading to a class action lawsuit revealing that the bags were not genuinely recyclable, and Hefty knowingly misled the public.
The company faced criticism in 2020 for not ethically sourcing wood products and using illegally logged wood despite having FSC certification, raising concerns about the transparency and ethics of FSC.
False claims were made about having the lowest plane emissions in Europe, but evidence proved otherwise, resulting in the removal of their misleading advertisements.
What is Green Marketing?
Green marketing promotes a company’s environmentally friendly or sustainable products and business practices.
For example, green marketing occurs when your packaging is made entirely of recycled paper products and you include it in your marketing or brand-building initiatives.
Green marketing examples include substantiated claims that your:
- Local manufacturers produce the goods.
- Raw materials are certified as coming from environmentally friendly sources.
- People are paid a fair wage and work in ethical conditions.
- A portion of the company’s profits are donated to rainforest rehabilitation initiatives.
Benefits of Green Marketing
Aside from the obvious environmental and social benefits, consumers prefer to do business with companies that care about the environment and the community. Green marketing also has the following advantages:
Recruiting investors: 33% of millennial investors only invest in companies with strong environmental values and initiatives.
Attracts customers: 35% of consumers prefer sustainable over non-sustainable products when possible. They also avoid using plastic whenever possible and are willing to pay more for food produced locally or sustainably.
Greenwashing and Green Marketing Difference
When it comes to green marketing vs. greenwashing, marketing is when a company truly lives up to its green and sustainability claims.
It’s truthful and open. Greenwashing occurs when a company fails to meet (or is perceived to complete) its green and sustainability claims.
Unfortunately, even companies with the best intentions can be accused of greenwashing if they do not conduct their business honestly and ethically.