Cluster V — Chapter 80

Greenwashing

Claudia E. Henninger¹, Panayiota Alevizou²

¹ Department of Materials, University of Manchester, United Kingdom ² Management School, University of Sheffield, United Kingdom

Keywords: environmental and social governance (ESG), environmental communications, misleading sustainability claims, sustainable business, sustainable development goals (SDG)

On this page

Definition
History
Different Perspectives
Application
Further Reading

Definition

Greenwashing is a form of selective or deceptive communication whereby an organization presents itself as being more environmentally friendly than it actually is, exaggerating or misrepresenting the extent or impact of its environmental initiatives and practices. Greenwashing capitalizes on a growing societal interest in sustainable organizations, products, and services, without necessarily implementing genuine sustainable business models or mitigating the organization’s ecological and social impact. In essence, greenwashing enables organizations to portray themselves as environmentally conscious and gain the perception of being good corporate citizens, without making substantial changes to their operations.

Greenwashing is a concept that encompasses various aspects of corporate operations and product life cycles. It is a dynamic phenomenon that co-evolves with market trends and consumer preferences and involves multiple stakeholders, making it difficult to establish a universally accepted definition. Greenwashing comes in different forms, including intentional (see Box 80.1) or unintentional, direct or indirect, factual-based or “aspirations”-focused, or visual and/or textual. It can use multiple media to spread misinformation, which can result in delaying and sabotaging global priorities and progress toward the Sustainable Development Goals (SDGs). Many platforms focused on sustainability collect and disseminate examples of greenwashing (e.g., ClientEarth, Greenwashingindex, Earth.org, or The Sustainable Agency).

Box 80.1 Examples of intentional direct greenwashing

Nature-inspired packaging and branding: Using symbols, visuals, and language associated with nature on products or services can give the impression that they are made from natural materials or cause less environmental harm, even if no evidence is provided to support these claims.
Irrelevant claims: Labeling a product as “free from” certain chemicals when those chemicals are not typically used in that type of product, creates a misleading impression of environmental superiority.
Overemphasizing a minor ecofriendly feature or improvement: Highlighting a small environmentally friendly aspect of a product, such as recyclable packaging, while ignoring a more significant environmental impact of the product, such as the use of harmful ingredients or unsustainable production and distribution processes.

History

The term “greenwashing” was coined in the 1980s by environmental activist Jay Westerveld in an essay inspired by the hotel industry’s “save the towel” movement. Hotels encouraged guests to reuse and reduce towel use to conserve resources, but Westerveld argued that this was more about reducing costs than genuine environmental concern. The essay sparked a broader awareness of deceptive marketing practices where companies made unsubstantiated or exaggerated claims about their environmental efforts.

Greenwashing gained momentum in the 1990s, as sustainability became a significant global concern. Companies across various industries began to recognize the potential of appearing to be sustainable, and engaged in marketing this. However, many of these sustainability-inspired claims were superficial or outright misleading, resulting in consumer skepticism and calls for greater transparency and accountability. Additionally, the rise of social media and increased consumer awareness have further pressured companies to substantiate their claimed environmental credentials, making it harder to “claim sustainability”, without facing backlash (see Boycotting and Buycotting, Subvertising). To that end, regulatory bodies, consumer protection groups, and NGOs have introduced guidelines for organizations engaging in sustainability claims and for consumers trying to decipher such messages.

Governmental efforts to combat greenwashing practices have intensified globally. In 2024, the European Parliament formally approved a new directive requiring EU member states to apply stricter rules against misleading environmental marketing claims made by companies. Similarly, in 2023, the Australian Competition and Consumer Commission published guidance on environmental claims, while the US Federal Trade Commission updated its Green Guides to deal with a rising number of greenwashing cases.

East Asian countries also appear to be following suit with similar regulatory approaches. These actions by governments and regulatory bodies across different regions indicate that greenwashing has become a widespread issue transcending companies, industries, and geographical boundaries. Yet, the implementation and enforcement of these regulations have been inconsistent across different regions.

Different Perspectives

Communicating sustainability has been associated with various advantages for organizations. For instance, organizations communicate sustainability to enhance their legitimacy by demonstrating their commitment to, for instance, the UN’s SDGs (see The Role of Business). This type of communication can build trust with the public and regulators and lead to greater market performance, as consumers increasingly favor more sustainable options. Additionally, communicating sustainability efforts can provide a competitive advantage and differentiation. Finally, showcasing sustainability initiatives attracts stakeholders, including investors, employees, and partners, who increasingly prioritize environmental and social governance (ESG) criteria, thus ensuring long-term collaboration.

From a corporate perspective, communicating commitments to sustainability can be seen as increasingly challenging given potential allegations of greenwashing. Historically, there have been few legal repercussions for greenwashing, largely because consumers are often unaware of the practice and its underlying science. Additionally, the absence of a universally accepted definition and standardized auditing systems further enables companies to exploit this practice. Despite the risk of backlash, many organizations still are keen to communicate their commitment to sustainability, as in many cases the perceived benefits of being seen as a sustainable organization by the public often outweigh the risks of such accusations.

A growing number of companies engage in “green hushing” or “brownwashing”: the practice of remaining silent about their sustainability practices and, as such, avoiding market and stakeholder pressures. These practices may, however, also have negative impacts on firms, such as lower financial performance and reputation. Consequently, companies face a dilemma (and paradox) when it comes to effectively communicating their sustainability efforts.

Application

Greenwashing comes in different forms, ranging from product-level greenwashing to corporate promises for future sustainability commitments. In the late 2000s, TerraChoice, a consulting firm, released a seminal report titled The Six Sins of Greenwashing, which brought the issue to the forefront of attention for policymakers, organizations, and academics, sparking discussions and receiving extensive media attention. Greenwashing as both a practice and study has evolved greatly since the time of the report and organizations have become more sophisticated in their approach to greenwashing. Greenwashing constantly evolves in both concept and practice, thus posing ongoing challenges for consumers and policymakers trying to keep up and respond.

Greenwashing can be direct and indirect. Organizations engage with direct greenwashing when they intentionally practice it on the level of a product, brand, or corporate image. The most prominent forms of direct greenwashing involve the use of misleading advertising claims and deceptive labeling. They often employ visual imagery (e.g., nature scenes, animals) and sustainability-inspired language (e.g., “ecofriendly”, “natural”) to create an illusion of environmental responsibility. Claims may be vague, unsubstantiated, and/or false. Direct greenwashing can also manifest through corporate statements or visions that set overly ambitious future goals and commitments (Box 80.1).

Indirect greenwashing, on the other hand, can occur when a company is associated with suppliers, distributors, and investors who may engage in questionable practices; or with ecolabeling and certification organizations that have been criticized for having lower auditing standards and criteria compared to others. This may be intentional or unintentional. Intentional indirect greenwashing companies may, for instance, deliberately omit their associations with questionable third-party organizations.

Greenwashing is a complicated phenomenon that needs to be carefully investigated and managed to avoid delaying progress toward sustainability goals. Looking ahead, tightening regulations may lead organizations who are greenwashing to eventually “walk the talk”, but also guide them to substantiate sustainability claims. To gain and maintain market trust, organizations may view sustainability communications as integral to their ethos and core value system, fostering transparency and accountability while steering clear from the “sins of greenwashing”.