How to identify and eradicate corporate greenwashing?

September 27, 2021
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In the world of sustainability, the term “greenwashing” is often used but little understood. However, I believe it’s an important concept to familiarise yourself with, because corporate greenwashing has the potential to cause major damage to both businesses and the environment if left unchecked and especially if you are about to conduct your Environmental, Social, Governance (ESG) company analysis.

In this blog, I’ll give you my take on greenwashing, what it means in the world of business today and, crucially, how to avoid it.

What is greenwashing? 

Greenwashing is a marketing tactic that exploits the environmentally conscious. Corporations that greenwash will spread misinformation about their own business dealings that make themselves appear sustainable without truly delivering on that commitment. Greenwashing may take the form of a superficial ‘green’ initiative or campaign launched by a corporation without long-term changes to their business model, supply chain or product development.

One of the main reasons why corporations embark on these initiatives is to silence environmentally conscious consumers, employees and investors, and avoid reputational damage if they are seen to be doing nothing. Consequently, these initiatives often lack a thorough and reliable measure of impact.

These ‘sustainable’ actions most often undone when they are based on insufficient research and development (R&D). However, meaningful R&D can be an expensive and time-consuming outlay, causing many corporations resolve to what they perceive as being the easiest and most cost-effective solution, which often involves a form of greenwashing. 

Greenwashing example: H&M

Fashion retailer H&M has recently come under fire for its latest global marketing campaign, which spotlights the next generation of activists fighting for climate action. Unfortunately, when we look closer, we can see another example of corporate greenwashing unfolding.

Many retailers have sought to capitalise on the ‘trendy’ move towards sustainable buying behaviours, however H&M is now battling some serious claims that they have misled customers with so-called environmental initiatives.

H&M has recently been identified as the worst offender for flouting draft guidelines by the UK’s Competition and Markets Authority, aimed at ensuring a product’s life cycle is truthfully represented in its labelling. Some 96% of H&M’s sustainability claims were called out as being unsubstantiated or misleading.

Earlier this year, their appointment of Game of Thrones star Maisie Williams as their ‘global sustainability ambassador’ attracted criticism for seemingly ignoring the vast network of climate experts that have been campaigning for action in retail for years, in another vanity-driven move.

Through surface-level action, such as campaigns and celebrity endorsements, H&M is seeking to capitalise on the trend of conscious consumerism without taking sufficient long-term action to reduce its environmental impact. This is yet another example of blatant corporate greenwashing.

How damaging is greenwashing to business? 

Not only does greenwashing limit meaningful action to help the environment, but it also allows businesses to profit from conscious consumerism without committing to long-term action. It is a waste of crucial resources that could be better allocated to truly make change. As a result, greenwashing can carry serious negative consequences, including:

  1. Prosecution by the Federal Trade Commission (FTC). The FTC recently designed Green Guides to help businesses avoid coming under fire for deceiving customers. In the UK, the Committee of Advertising Practice (CAP) this month announced their intention to release new guidance to advertisers to avoid misleading environmental claims.
  2. A tarnished business reputation and a negative brand image
  3. Exposing consumers to environmentally damaging products.
  4. Despite perceived short-term benefits, greenwashing can ultimately play a significant role in the demise of non-ESG compliant businesses. 

How can businesses prevent greenwashing?

The Business for Social Responsibility (BSR) is an organisation of sustainable business experts, who are encouraging corporations to take meaningful steps towards a more sustainable world. Their full report on preventing greenwashing is a fantastic starting point. I would also offer the following advice:

  1. Listen to your customers: They want to see you act. Engaging customers could drive innovation in your environmental initiatives as well as paying dividends with external brand advocacy.
  2. Be truthful and realistic: Stakeholders know that sustainability isn’t simple, so they won’t expect overnight transformation, but authenticity and transparency are key to driving long-term solutions. Danone, for example, have announced a 15-year commitment to becoming B-Corp Certified.
  3. Focus on the whole business: Sustainability cannot be achieved in isolation. Seek to understand the entire breadth of your company’s functions, drive action across as many areas as possible, and educate staff on the journey your organisation is committing to.

Customers are increasingly challenging brands to come up with more measurable and impactful solutions to the sustainability crisis.

Is your business up to the task? Get in touch today to find out how Communique can help you to deliver effective ESG communications.


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