Transparent is the New Green: Risks of Greenwashing

Promoting your company’s sustainability practices is essential, but it’s not always easy. Consumers want more green products just as regulators are cracking down on companies that practice greenwashing. Greenwashing is more than just a cover-up; it is any misleading practice of making false green claims. Greenwashing has many shades, each of these practices carries risks of greenwashing such as brand reputation, regulation fines, and legal liability.

When Jay Wersterveld coined the term greenwashing in 1986, he observed that the hotel he was staying in asked guests to save water by reducing towel use when, in fact, most of its operations were not sustainable or environmentally friendly. Not only was the hotel greenwashing, but it was also shifting the responsibility of sustainable practices to its guests–also known as greenshifting. In the 40 years since Westerveld coined the term, companies have faced backlash for greenwashing, resulting in lawsuits and government penalties. According to a study by RepRisk, the severity of lawsuits related to greenwashing has increased over the past year. The consequences can include fines, damage to reputation, and loss of consumer trust.

Today we dig into the risks associated with the many shades of Greenwashing:

Green Labeling

Green labeling is easy to find and easy to do—even by mistake. Labels tout vague claims like “eco-friendly” or “sustainable” when marketers follow the green marketing trend to appeal to consumers. Labels using green imagery, like green leaves and flowers, can misrepresent products as being environmentally friendly. Even labels with more specific claims like “plant-based,” “recyclable,” and “all-natural” can be inaccurate when the marketing department doesn’t check in with the product development and legal departments to find out if the claim accurately reflects the product and what the consequences are if they get it wrong.

Aveeno is facing a class action lawsuit claiming it falsely marketed its makeup-removing wipes as 100% plant-based and included green imagery to amplify these claims. Because there are no greenwashing laws in the US, the Aveeno lawsuit is based on false advertising claims and violation of California’s Competition Law and Consumers Legal Remedies Act.

Avoid the risks of green labeling by providing accurate information. Resist the temptation of using vague environmental claims or imagery to attract customers and boost sales.

Greenlighting

Highlighting a minor eco-friendly aspect of a business, while obscuring the fact that the majority of the company is not sustainable, is greenlighting and should be avoided.

The oil industry is rebranding and highlighting minor green initiatives even while its main product remains fossil fuels. At the COP29 conference, TotalEngergies (formerly Total) promoted its electric charging port in the center of Kampala, along with plans to install more throughout Uganda. Although there is nothing illegal about this promotion, and TotalEnergies is not trying to cover anything up, it still raises questions about overall commitments to sustainability.

Avoid greenlighting by providing clear and truthful information that accurately represents sustainability actions across your company. It’s essential to be transparent and genuine in your messaging.

Greenshifting

Greenshifting refers to the practice of companies suggesting that the consumer can do more to help the environment, thereby deflecting responsibility away from themselves.

Shell faced a backlash when it posted a climate poll on Twitter asking, “What are you willing to change to help reduce emissions?” After criticism, Shell took down the poll.

Beyond Petroleum (formerly British Petroleum) created a carbon footprint calculator for consumers—asking them to assess their carbon footprint. The underlying message was that by reducing their carbon footprint, individuals could stop climate change. However, the ad campaign by bp did not mention its own efforts to reduce its corporate carbon footprint.

Avoid Greenshifting: Don’t expect your customers to solve the climate crisis by shifting the responsibility to them. Be transparent about your company’s efforts to reach its sustainability objectives.

Greenrinsing

Greenrinsing happens when a company frequently alters its ESG (Environmental, Social, and Governance) objectives before meeting them to give the impression of moving towards its goals.

This behavior can be challenging to spot. However, through research, Planet Tracker discovered that Coca-Cola and PepsiCo continuously adjusted their recycling targets by pushing back the target date while increasing their goals. Although not facing any legal challenges on these actions, it does not look good to consumers.

Avoid Greenrinsing by setting clear and achievable sustainability goals. By setting and working towards tangible goals, your business can showcase its dedication to authentic sustainability.

Greencrowding

Greencrowding is when companies band together to avoid scrutiny, advancing at the speed of the slow adopters, thus decreasing accountability.

Colgate is facing legal challenges for its recyclable toothpaste tube design, but it took a leading step away from greencrowding by sharing its design with other companies, hoping to inspire improvements in recycling processes. Despite these legal challenges, Colgate is standing out and not hiding in the crowd.

Don’t stay in the back of the pack! Share your successes! Collaborate with suppliers and partners who prioritize sustainable practices. By selecting partners who share your values, you contribute to a positive ecosystem that supports ethical practices.

Greenhushing and Greensquashing

Avoiding greenwashing can lead to greenhushing. Greenhushing, a byproduct of greenwashing, happens when companies shy away from promoting their sustainability efforts for fear of being accused of greenwashing. This leads to a decrease in both accountability and environmental commitments. Furthermore, when the conversation about the environment dies down due to greenhushing, companies can reduce their commitments to sustainability—participating in greensquashing.

Keep the conversation going! Continue to communicate your environmental claims. The more companies talk about what they are doing for the environment, the better it is for everyone. Softly can help you make your green claims with confidence by providing regulatory information, case law, and competitive information regarding green marketing claims in one place. By being transparent and communicating your green practices, you can raise awareness as you raise the bar for sustainability standards.

Transparent is the New Green

The risks of greenwashing include not only legal consequences but the loss of consumer trust. You may think you’re avoiding greenwashing in its many forms, only to fall into the trap of greenhushing. To avoid the greenwashing pitfall, it is important to be straightforward and communicate the sustainability of your company clearly. Provide accurate information and be honest about what you’re doing to be green—be transparent.

Businesses can also avoid the pitfalls of greenwashing—and the need for greenhushing—by leveraging effective tools. Softly Solution’s Green Claim Navigator offers a streamlined approach for identifying relevant anti-greenwashing regulations, resources, and insights tailored to specific product claims. With actionable guidance, it empowers users to minimize the risk of unintentional greenwashing.

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Information provided is for general purposes only and not legal advice; consult a qualified attorney for personalized guidance. We disclaim any liability for actions based on this information.