What does greenwashing mean?

Greenwashing is the practice of exaggerating a company’s sustainability credentials through misleading marketing and communications to make the company appear more green than it actually is.

Greenwashing refers to the act of making false or misleading claims about the environmental credentials of a company or product to appear more green, clean and sustainable to the customers and stakeholders. 

You might have come across greenwashing in the form of companies investing time and money in marketing or branding their products as “green” rather than actually moving the needle towards becoming sustainable.

In this article, let’s break down the meaning of greenwashing, why it’s a big deal, its role in CSR and how you can spot greenwashing. We'll also discuss some real examples of companies greenwashing in Australia.  

What is greenwashing? 

The term “greenwashing” was coined by environmentalist Jay Westerveld in a 1986 essay where he wrote about hotels falsely promoting the reuse of towels as a broader strategy of becoming more eco-friendly when it was a move to cut back the cost of washing too many towels.

According to the Cambridge Dictionary, greenwashing is “an attempt to make your business seem interested in protecting the natural environment when it is not”. 

As the importance of sustainability continues to rise in Australia, consumers are increasingly interested in buying sustainable or environment-friendly products. This has led to companies making sustainability claims.

Such claims can be made through product packaging, advertisements, social media, corporate social responsibility statements, and specific symbols and logos added to a business’s offerings.

However, these claims have often been found to be false, misleading or without a reasonable basis. This is known as greenwashing.

As an analogy, greenwashing to corporations is as tree-hugging is to people who claim that they care about the environment. It’s a symbolic reference that has little actual outcome. And, frankly, it just confuses the issue trying to be resolved.

Why is greenwashing bad?

Greenwashing is often intentionally carried out through a wide range of PR and marketing efforts, although it can sometimes also result from a lack of knowledge about sustainability. Greenwashing campaigns are misleading and hinder the progress of broader sustainable and circular economy initiatives. 

Environmental and sustainability claims are factors you might consider when purchasing a product. If these claims are unclear or misleading, your trust in not just the product, but sustainability claims in general, is compromised.

This means companies genuinely providing sustainable products and services will also lose consumer trust and be unfairly disadvantaged.

When a company employs greenwashing, it siphons away the market share from products and services that truly aim to reduce their impact on the environment while simultaneously deteriorating stakeholder trust. 

For instance, fossil fuel companies employing greenwashing tactics while actively opening new coal and gas projects slows down the process of moving away from their harmful products towards genuinely sustainable products. It also obscures the detrimental part the fossil fuel industry is playing in the climate crisis.

The environmental issues get sidelined or, more likely, worsen as greenwashing often sucks up the airtime and misdirects well-intentioned consumers to the wrong path. In the end, no progress is made towards improving the environment.

On the business’ end, greenwashing can also have a devastating effect on employee engagement. When workers sense their employer greenwashes, they lose faith in their company. Subsequently, there will be decreased productivity, morale, and a high turnover rate.  

Put simply, greenwashing can come back to haunt companies. 

What are some examples of Greenwashing?

Unfortunately, there are many real examples of companies engaging in greenwashing. Competition regulator Australian Competition and Consumer Commission’s (ACCC) report ‘Greenwashing by businesses in Australia’ found that, out of 247 businesses surveyed, 57% had made concerning claims about their environmental and sustainability credentials. 

A report by Greenpeace in 2021 found that some of Australia’s high-emitting corporations have “set net-zero targets without any commitment to reduce their use and production of fossil fuels”. AGL, Qantas and Woodside were listed as a few such corporations.

AGL’s greenwashing comes in the form of using misleading claims of “net zero” and “carbon neutral” to advertise itself as environmentally responsible in front of the Australian public, while still having 83% of its electricity produced from highly polluting coal-burning power stations. Replacing its coal-burning power stations with renewable energy is the only way for AGL to reduce its emissions, according to Greenpeace.

Similarly, oil firms BP and Shell have been accused of greenwashing their image through advertisements that their business activities do not back up. Even after a warning in 2021 by the UK government to stop making misleading environmental claims, both BP and Shell continued with their greenwashed ads.

Contrary to their marketing claims, BP and Shell generated just 0.17% and 0.02% of energy from renewable sources in 2022, respectively.

Additionally, 97% of BP’s investments and 91% of Shell’s investments went towards fossil fuels.

Other large fossil fuel corporations that operate in Australia, like Chevron, Woodside, Anglo American, Santos, Glencore, Inpex, ConocoPhillips and Esso, have committed to achieving net zero emissions by 2050 or sooner. But, at the same time, they’re expanding their fossil fuel operations.

Greenwashing and Corporate Social Responsibility (CSR)

Sustainable Development Goals (SDGs) have had a big push from the UN and organisations are increasingly expected to incorporate sustainability into their business practices for the good of both, their business and the planet.

A 2022 sustainability report by Nature and The Lab revealed that 73% of the Australians surveyed believed all businesses should take the necessary steps to become environmentally sustainable. 4 out of 10 Australians will stop spending money on companies that are not acting sustainably. 

There is clearly a growing concern about environmental safety in Australia and beyond. As you’ve learned so far, corporations are resorting to greenwashing in their communications, including CSR initiatives and statements, to meet new customer expectations. 

Here, it’s important to note that Australians also admitted to being unsure about a company’s sustainability claims — with 73% reporting they don’t believe in the accuracy of a brand’s claims and 56% admitting to being confused.

A large majority of Australian consumers have expressed their desire for brands and retailers to be more transparent about the origins and sustainability of products.

CSR communications are already viewed with scepticism by consumers since they don’t always understand why companies fail to implement their environmental goals. Adding greenwashing into the fray takes away any legitimacy of the strategy for greenwashing CSR. 

With the increased transparency and accountability, consumers might be more forgiving towards companies that genuinely tried and failed to achieve their CSR goals than those who exaggerated their credentials with misleading messaging.

Greenwashing might help in raising awareness of the need for sustainability, but the practice does more harm than good. It’s a temporary solution that might initially help organisations, but in the long run, it just doesn’t work. Ultimately, both the company’s CSR messaging and actions need to be on the same page. 

How can you spot greenwashing and avoid it?

As you’ve seen, the increase in people looking to decrease their carbon footprint and live a more eco-friendly life has tempted many companies to resort to greenwashing to tap into the market. 

Greenwashing is detrimental as it can divert investments away from authentic initiatives. So, it’s important to recognise greenwashing tactics, challenge misleading CSR messaging and hold the companies accountable.

Here are some ways you can start to spot greenwashing:

• Look beyond labels. Words like ‘natural’, ‘eco-friendly’, ‘sustainable’, ‘net zero’, and others might sway you to believe a product is green. But these are vague descriptions that might not have any factual basis. Look for details about the company’s sustainable practices and deadlines for achieving promised commitments.

• Look beyond suggestive visuals. Much like the labels, visuals such as nature-based images can trick us into believing that a product is eco-friendly. Sometimes a company might even colour their product or logo green to greenwash their image. Instead, you should search for proof of their eco-friendliness.

• Beware of lack of proof and transparency. If a company’s product packaging or website doesn’t give you information on their environmental impact or initiatives, it’s best to steer clear of it. A company that’s passionate about accomplishing its sustainability goals will tell you about its work towards reducing its environmental impact.  

• Read about the certifications. There are several third-party certifications that can be good indicators of sustainability. The certifications essentially do the vetting for you since they tend to have specific criteria and guidelines. But do keep in mind that greenwashers might take advantage of lenient certifications to appear more sustainable than they actually are. 

• Pay attention to symbolic actions. Some companies might draw your attention to positive actions and campaigns they’re undertaking to drive your attention away from their larger business activities that are contributing towards climate change.

Understanding greenwashing

By now, you should have a fair idea of what greenwashing is, why it’s detrimental towards broader sustainability strategies and how it manifests into marketing and CSR communications. This understanding, along with the tips on how to spot greenwashing, should help you avoid greenwashed companies and products.

The Australian Consumer Law (ACL) states that Australian businesses must not mislead or deceive consumer in any way. Companies that engage in these practices can face serious penalties. Consumers are legally entitled to rely on claims of environmental safety through the Competition and Consumer Act 2011.

Additionally, the ACL applies to all forms of marketing, including claims made in the form of advertising across all mediums, and on packaging and labelling. The ACCC has also laid out the type of claims that should be avoided and that can be problematic while green marketing for companies to follow.