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The capital and consumer market for green products and services is rapidly expanding and with increasing concerns of global warming, more and more consumers are becoming environmentally conscious. As environmental advocacy gains momentum, corporations have encountered intense pressure to transform their business practices and to employ more sustainable means of productions and produce environmentally friendly goods and services. Yet, this process can be quite lengthy and costly, thus many companies are unwilling to make this change. Instead, many corporations engage in ‘greenwashing’, this entails misinforming on their environmental performance or environmental benefits of their products. Thus, this article will discuss the phenomenon that is greenwashing, the various forms it assumes, its internal and external drivers as well as its implications on the environment and on the relationship between the consumers and producers.
The term ‘greenwashing’ refers to the process employed by large companies to create misleading information about their environmental performance or the environmental benefits of a product or service. As consumer demands for green products increase and environmental advocacy grows, more and more companies have turned to greenwashing to boost their sales and generate profit. In the last 20 years, green advertising has increased significantly and nearly tripled since 2006. Greenwashing takes many forms, from ‘outright lying’ to the use of buzzwords like “all-natural” and “eco-friendly”. Upon closer inspection of corporations and the goods and services they produce, greenwashing becomes easier to spot. The common signs of greenwashing include hidden trade-offs, lying, vagueness, lack of proof, the use of fake certification labels, the inclusion of irrelevant facts and making contradictory claims to distract consumers from the real issues. The aforementioned aspects are what is known as the “Seven Sins of Greenwashing”.
Another dimension of greenwashing is attention deflection, this includes selective and inaccurate disclosure. Attention deflection also includes deceptive visual imagery and written texts, such as using the colour green in advertising due to its association with nature and sustainability. Or the use of eco-labels, which are a method of environmental performance certification which identify products and services that are environmentally friendly. Today, more corporations engage in selective disclosure in environmental reporting, due to the increasing pressure on corporations to report information about their environmental performance. Selective disclosure refers to the divulgence of positive attributes while withholding negative information, this is done voluntarily through provision of corporate environmental and/or sustainability reports. Linked to this, is another marketing strategy of making verbal claims about environmental performance without any facts to back it up. Another form of greenwashing is the “halo effect”, this is when stakeholders view the entire corporation and its products to be environmentally ethical based on a single positive aspect.
The surge in greenwashing and green advertising is a result of a number of both internal market factors and external consumer demands. The first is the competition between ‘green firms’ (good environmental performers) and ‘brown firms’ (poor environmental performers). This competition amongst firms is motivated by the increasing consumer demand for green products. The competitive nature of the business sector compels corporations to unceasingly try to differentiate themselves from their rivals. The inability and/or unwillingness to meet consumer demands, drives a number of corporations to misinform on their environmental performance by fabricating data, in order to create the illusion of environmentally friendly practices. The second driver of greenwashing is the insufficient regulation of corporate environmental performance. The lack of regulatory mechanisms makes it easier for companies to manufacture false data regarding their environmental performance, as they go largely unchecked. A third external driver of greenwashing is the pressure from the media, non-governmental organisations (NGOs) and environmental activists, as they tend to have more reach and influence than informational websites.
NGOs and media, serve as “watchdogs”, by investigating corporations and providing the public with a list of firms guilty of greenwashing. The fourth driver of greenwashing are the demands of consumers and investors . Corporations seek to satisfy stakeholder requirements and represent their products as desirable to the public. Many are unwilling to take the necessary steps to create sustainable products and thus opt to misrepresent their environmental performance. Lastly, a lack of knowledge on the subject of greenwashing provides corporations with the incentive to misrepresent themselves and their products. Since much about greenwashing is unknown to the majority of the global public, firms are able to misinform on their environmental performance, largely undetected. Often, it is fashion companies, like H&M which utilise greenwashing in order to gain a competitive edge over genuinely sustainable companies. Shell and BP are on the list of corporations that have been accused of greenwashing.
Greenwashing has serious adverse effects on both the natural environment and the ethical status of corporations. It not only creates major setbacks for climate change initiatives, but also jeopardises the relationship and trust between the private and the public sector, further alienating the public. Moreover, it endangers consumer and investor confidence in green products (green scepticism). Deceptive green marketing lures consumers into purchasing products they believe to be green, when in reality they are not. Consequently, consumers unknowingly and unintentionally contribute to adverse practices which harm the environment.
Clearly, the bottom-line is profit, the end goal is fueled by the incentive to beat competition in the quest to capture demand. Greenwashing therefore becomes the form and vehicle through which underhand marketing of non-compliant businesses seek to undercut or be on par with genuine above board, enviro compliant business entities. This unscrupulous business approach raises ethical issues, which in turn raise legal and regulatory questions that may have political and even constitutional implications. Making unsubstantiated claims about the benefits of any product and/or service affects the rights of consumers and jeopardises shareholder value. Furthermore, taking advantage of, and fooling consumers does not inspire confidence, nor does it reflect good corporate citizenship. Greenwashing is essentially a violation of corporate social responsibility as it further deepens the divide between consumers and producers. Presently, there is a need for increased transparency of environmental performance, through both voluntary and mandatory reporting. Moreover, it is necessary to hold firms accountable, as letting them operate unchecked condones the perpetuation of greenwashing. Facilitating and improving public knowledge about greenwashing is essential to combating it, as well as bolstering the individual and collective agency of consumers in the private sector.
Tshegofatso Ramachela is a certified paralegal and a final year student at the University of Pretoria, currently completing a degree in International Studies, Political Sciences and History. She is a humanitarian, an intersectional postcolonial feminist and an aspiring international development and peace worker, who hopes to one day be a Doctoral student. Tshegofatso is a permanent member of The Art of Politics writing staff.