Across all industries, "greenwashing" in the form of overstated sustainability initiatives run rampant.

‘Greenwashing’ might be financially beneficial—until your customers catch on

Across all industries, "greenwashing" in the form of overstated sustainability initiatives run rampant.

Consumers increasingly want to purchase eco-friendly products—and they’re willing to pay more for them, according to a recent survey. But how do consumers know if a product, energy or service is truly sustainable?

They don’t, according to Larry Baxter, professor of chemical engineering and a sustainable energy researcher at Brigham Young University. Some organizations may claim to certify sustainability, but there is no generally accepted metric or organization that does so, he says.

“It is common for companies and governments, including the US government, to misrepresent their efforts to mitigate climate change, just as it is for them to misrepresent other socially sensitive contributions,” Baxter says. This makes it very difficult for consumers to assess the net benefits of the product, service or activity being promoted. This makes it difficult for consumers to make good choices and for policymakers to establish priorities and use resources wisely.

“Greenwashing is a term used to describe overstating or misrepresenting efforts to support sustainability, and it does more damage than just misinforming the public or other reviewers,” Baxter says. “It also can inappropriately direct funding and priorities to activities that do little to increase sustainability but may be financially or otherwise beneficial to the perpetrators. It can also encourage activities that have little value, creating an opportunity cost for those that do.”

Not only are consumers confused or kept in the dark, but in some cases, companies don’t even know the truth behind their products. A study conducted by Google Cloud shows that many companies think they’re doing better than they are on sustainability.

Eighty percent of the executives surveyed give their organization an above-average rating for their environmental sustainability effort, according to the Google Cloud study. Eighty-six percent believe their efforts are making a difference in advancing sustainability, yet only 36 percent of respondents said their organizations have measurement tools in place to quantify their sustainability efforts. Just 17 percent are using those measurements.

How, then, can you know what products to use? Baxter advises consumers, first and foremost, to inform themselves enough to be able to see through advocacy and other one-sided representations. “In this regard, it is good to focus on finding a correct answer and not be unduly influenced by emotional or attractive and/or effective advocates for something,” he says.

The American Marketing Association warns marketers against greenwashing. “Simply claiming on your packaging that your company has a commitment to the environment—perhaps with imagery of waterfalls and sunlit forests, along with a certified organic label—is no longer enough,” the group says. “Brands who stay true to their environmental claims benefit from more favorable customer perception. It’s also the right thing to do.”

This was especially clear at November 2022’s UN Climate Conference in Sharm el-Sheikh, Egypt. Attendees pushed to remove companies that greenwash from sponsoring the conference. In a petition called “Kick Big Polluters Out,” hundreds of groups rallied behind a proposal for an accountability framework for the UN Climate Conference. “Big Polluters must not be granted access to climate policymaking,” the petition said. “This allows them to continue to unduly influence, weaken and undermine the global response to climate change.”

Not only are consumers confused or kept in the dark, but in some cases, companies don’t even know the truth behind their products. A study conducted by Google Cloud shows that many companies think they’re doing better than they are on sustainability.

One of the “Big Polluters” named by the petitioners was Coca-Cola, a sponsor of the conference. “Plastic is suffocating our planet and, year after year, one company leads the pack of polluters—Coca-Cola,” the petition says. “Coca-Cola spends millions of dollars greenwashing their brand, making us believe that they are solving the problem. But behind the scenes, they have a long history of lobbying to delay and derail regulations that would prevent pollution, keeping us addicted to disposable plastic.”

According to Nick Guroff, a spokesperson for the nonprofit Corporate Accountability, the letter did gain favorable attention from UN governments, and they are considering a policy to have UN Climate Conference delegates declare their interests going forward. “This would at least create greater visibility into potential conflicts of interest and a better view of other means by which major emitters influence negotiations,” he says.

When it comes to advertising that promotes a sustainable image, Corporate Accountability looks at the intent of the so-called green advertising, Guroff says. Is this marketing intended to persuade public officials? Does it give a corporation cover to advance policy solutions that are favorable to the industry but ineffective in stemming emissions? Is this marketing intended to obfuscate environmentally destructive practices? These are questions that Corporate Accountability asks.

“In terms of the harm being done by companies that lie about their intentions, we look at the motivations for the most polluting corporations to promise lofty (yet needed) emissions reductions absent an authentic commitment to achieve them,” Guroff says. “The idea usually is to signal, ‘You needn’t regulate us; we’ll self-police,’ or, in other words, to stave off binding, enforceable requirements. These corporations are buying time to continue polluting and profiting while imposing an extreme cost on generations to come.”

Energy Tracer Asia named what it considered to be the top 10 greenwashing companies in 2022. Among them is Coca-Cola—along with McDonald’s, Royal Dutch Shell, Volkswagen, Sea World, Nespresso, Walmart, Red Lobster, Banana Boat and Unilever.

A lawsuit in California shows promise for advocacy groups that want to defend citizens of a particular state from pollution created by companies with out-of-state headquarters. In June of last year, California-based Earth Island Institute announced it had received a favorable court order allowing its landmark lawsuit to proceed against 10 major consumer goods companies for the nuisance allegedly created by their plastic packaging. They argue that this packaging is polluting California waterways with plastic trash, and the companies are touting their products as recyclable when they’re not.

“This ruling correctly finds that companies marketing, selling and profiting from products packaged in plastic in California can also be sued in California for the harms caused by their plastic packaging,” says Sumona Majumdar, Earth Island Institute’s general counsel. “Corporations like Coca-Cola and PepsiCo can’t be allowed to hide behind their out-of-state status to avoid accountability for their role in the plastic pollution crisis here in California.”

The lawsuit was filed in February 2020 in San Mateo County Superior Court in California against Crystal Geyser Water Company; The Clorox Company; The Coca-Cola Company; PepsiCo, Inc.; Nestlé USA, Inc. (now BlueTriton Brands); Mars, Incorporated; Danone North America; Mondelez International, Inc.; Colgate-Palmolive Company and The Procter & Gamble Company.

Baxter warns that despite environmental advocates’ best efforts, every sustainability activity needs complex analysis. Not everything is as simple as it looks. And in the end, it is important to remember that “sustainability in general, and climate change in particular, are very serious issues—and their mitigation is going to require changes by just about everyone.”

Diana is a seasoned freelance journalist with extensive experience covering business. She has been published in a number of publications with regional and national reach, including The Washington Post, Germantown Gazette, Digital Insurance, Fiscal Note, Meritalk, the Congressional Quarterly, Healthcare Finance, Employee Benefit News and more. Though she now lives in Washington, DC, she lived in Utah once upon a time, where she enjoyed backpacking the High Uintas.