Greenwashing and the consequences for the company – how to prevent it
Today, going green is increasingly a priority for consumers, businesses, and governments. Conscious customers are likelier to choose green products, prompting companies to emphasize their environmental commitment.
Unfortunately, some companies have fallen into the trap of greenwashing, a practice that misleads consumers about the true environmental impact of their products and activities. In this article, we’ll discuss greenwashing, its consequences, and how companies can avoid these unfair practices.
Table of content
What is greenwashing and how to recognize it
Greenwashing is a term used to describe dishonest marketing practices in which a company claims that its products or activities are more environmentally friendly than they are. Examples of greenwashing include overstating a product’s environmental credentials, manipulating data, or using vague eco-labels without recognized quality certifications.
Types of greenwashing
GREENCROWDING – Greencrowding is a strategy in which companies form alliances or associations with large, ambitious environmental goals, but the actual implementation of these goals is small. This mechanism works on the principle of “safety in numbers” – it is easier to hide in a crowd and it is more difficult to evaluate the individual actions of individual companies.
GREENLIGHTENING – involves highlighting a green feature of a product or service to distract consumers from other, more harmful actions. It is a technique of focusing on one small “green” aspect, while the rest of the company’s activities may be very environmentally unfriendly.
GREENLABELING – is the use of terms such as “organic,” “carbon neutral,” “sustainable,” or “green” without adequate factual support. Companies use these terms to imply that their products are greener than they are.
GREENSHIFTING – Greenshifting is the practice of shifting responsibility for negative environmental impacts to consumers rather than producers. Companies claim that it is up to consumers to make greener choices while avoiding responsibility for their actions.
GREENRISING – is when a company regularly changes its environmental, social, and governance (ESG) goals before achieving them. In this way, it avoids responsibility for lack of progress by constantly promising future action.
GREENHUSHING – a strategy in which companies hide their pro-environmental activities, or lack thereof, for fear of investor scrutiny or negative public reaction. Companies may underreport or minimize their actual environmental activities.
What to do when a company engages in greenwashing?
By 2023, more than half of consumers have encountered misleading sustainability claims from brands. People are fed up with these practices and are increasingly supporting brands that truly care about the planet.
Greenwashing is becoming easier to spot, and consumers are eager to call it out. New regulations, such as the EU’s ban on misleading green claims, which takes effect in early 2026, are making it easier to spot greenwashing. Similar regulations are emerging in other countries, such as “green guides” in the U.S. and new rules in the U.K. from May 2024.
Nearly three-quarters of executives (72%) believe that an audit of most companies in their industry would reveal greenwashing practices. With the implementation of the Corporate Sustainability Reporting Directive (CSRD), greenwashing will be treated the same as falsifying financial statements.
EU institutions have agreed on new rules to curb greenwashing, or misleading consumers about the environmental performance of products and services. The European Commission proposed the rules to protect consumers from false claims of “climate neutrality”. The new law requires such claims to be backed up by evidence, not just emissions offsets.
The regulations prohibit the use of general pro-environmental slogans without concrete evidence and the use of eco-labels without credible certification. Companies will have to submit realistic plans for achieving environmental goals, which will be verified by independent experts. The new regulations also aim to improve the sustainability of products and prevent practices that shorten their lifespan.
Fines for unfair greenwashing practices
In Poland, greenwashing activities are considered by the Office of Competition and Consumer Protection (UOKiK) as a violation of the collective interests of consumers by failing to comply with the obligation to provide reliable, truthful, and complete information. Companies that engage in such practices risk the imposition of appropriate sanctions.
The President of the UOKiK has the right to issue a decision ordering the cessation of such activities and, if they continue, to impose a penalty of up to 10% of the annual turnover of the entrepreneur in the year preceding the year in which the penalty is imposed.
Consequences of greenwashing
The use of greenwashing can lead to numerous negative consequences for the company, such as
- Loss of customer trust: Conscious consumers who discover they have been misled may lose confidence and trust in the brand, which can lead to a long-term decline in customer loyalty.
- Negative image: Social media and public accusations can quickly damage a company’s reputation, leading to a PR crisis and difficulty rebuilding a positive image.
- Financial penalties: Regulatory and investor scrutiny can result in hefty fines that severely impact a company’s bottom line.
- Damages: Consumers may seek compensation for unfair practices.
- Loss of customers: Customers may stop buying the company’s products in favor of more honest competitors, resulting in lost sales and market share.
How do you recognize greenwashing?
To avoid greenwashing, it is crucial to recognize when a company is engaging in these unfair practices. How can you spot greenwashing? Here are some signs to look for:
- Vague claims – Companies often use statements such as “environmentally friendly” without specific data or certifications. Such claims provide no specific information about how a product is green, making it difficult to assess its true environmental impact.
- Lack of evidence – Environmental claims should be supported by evidence such as test results, audit reports, or certifications from recognized organizations. If a company does not provide such evidence, its claims may be false or exaggerated.
- Overemphasis – Companies may overemphasize one feature of a product that is environmentally friendly while ignoring other aspects of their business that may be harmful to the environment. For example, a manufacturer may advertise recycled packaging, but the product may be highly polluting.
- Certifications without recognition – Companies may use symbols and labels that are not widely recognized or have no value. Consumers need to know and understand the difference between recognized certifications and those that may be created by the company itself without independent verification.
- Recognizing these labels can help consumers make more informed choices and avoid products and companies that engage in greenwashing.
How to avoid greenwashing?
Companies can avoid greenwashing by taking the following actions:
- Reliable communication: Provide transparent and accurate information about the true environmental impact of products.
- Recognized certifications: Use quality certifications from recognized organizations that validate the environmental performance of products.
- Sustainability Principles: Implementing and adhering to sustainability principles throughout the company’s operations.
- Responsible labeling: Use clearly defined and verified environmental claims on product packaging.
- Consumer education: Informing consumers about the company’s actual environmental efforts.
Social media vs. greenwashing
In today’s marketing, social media plays a key role in how companies communicate with consumers, which means that greenwashing can spread quickly. Companies often use platforms such as Facebook, Instagram, and Twitter to promote their green activities. To avoid greenwashing, social media communications must be authentic and backed by evidence.
Social media has a wide reach, which means that information can quickly reach millions of users. Companies should provide specific data, reports, and certifications that demonstrate their green efforts, rather than general statements. Transparency is key – open communication about successes and challenges builds consumer trust.
Engaging with consumers on social media platforms, answering questions, and accepting constructive criticism shows that the company is serious about its environmental commitments. Working with influencers who are green authorities can help build brand credibility, as long as it is based on real green actions.
Companies must be prepared to respond to greenwashing allegations quickly and factually to criticism to protect their reputations. In the digital age, reacting fast to criticism is as important as green actions.
Brand image vs. greenwashing
Brand image is very important to a company’s success, and greenwashing can significantly damage it. Companies need to be aware that unfair practices can lead to a loss of customers and a negative impact on the environment. Therefore, a company’s greenwashing efforts must be grounded in reality and sustainability.
Conscious consumers
Conscious consumers not only prefer green products but also actively seek information about companies’ green practices. Thanks to the growing availability of information and online tools, consumers can easily verify manufacturers’ claims about their green activities. Companies that transparently communicate their true environmental activities can differentiate themselves from the competition and attract loyal customers.
What’s more, companies that demonstrate a genuine commitment to sustainability can reap numerous benefits, including positive reviews, endorsements from green influencers, and the opportunity to earn recognized product quality certifications. All of this translates into increased brand equity and long-term market success.
Avoiding greenwashing - key steps
To avoid falling into the greenwashing trap, companies should take the following steps
- Transparency: Communicate openly and honestly about the company’s environmental performance.
- External auditing: Conduct regular audits by independent organizations to confirm the environmental performance of products and operations.
- Internal communication: Educate employees about protecting the environment and avoiding unfair practices.
- Long-term strategy: Implementing long-term sustainability strategies that deliver real environmental benefits.
Examples of actions taken for the benefit of the environment
- Reducing emissions – Implementing technologies and processes that reduce CO2 emissions, such as using renewable energy sources, upgrading manufacturing infrastructure, or optimizing logistics to reduce the carbon footprint.
- Conserving resources – optimizing water and energy consumption by implementing energy-efficient systems and technologies and promoting conservation in the company’s daily operations, which contributes to the sustainable management of natural resources.
- Recycling and waste reduction – implementing recycling programs and minimizing waste generation by using recyclable materials, reducing the use of plastics, and effectively managing production waste.
- Eco-innovation – Bringing innovative, environmentally friendly products to market, such as biodegradable packaging, energy-efficient appliances, or products made from recycled materials, which supports the development of sustainable technologies.
- Sustainable supply chain – working with suppliers who also adhere to sustainability principles, through audits and certifications, to ensure that each stage of production and distribution meets environmental standards.
- Employee education and engagement – educating employees about sustainability and involving them in green initiatives, which builds a corporate culture based on environmental responsibility and promotes sustainable practices in the workplace.
Summary
Greenwashing is a serious threat to the image and reputation of companies that engage in unfair marketing practices. To avoid greenwashing and build customer trust, companies should communicate their environmental efforts reliably, use recognized quality certifications, adhere to sustainability principles, and take real environmental action. By doing so, they can avoid the negative effects of greenwashing and win the loyalty of conscious consumers who are increasingly choosing green products.
![plan_be_eco_[New guidelines The European Commission recommends reducing emissions by 90% by 2040]_eng](https://planbe.eco/wp-content/uploads/2024/02/plan_be_eco_New-guidelines-The-European-Commission-recommends-reducing-emissions-by-90-by-2040_eng.png)
