Last year, the European Commission conducted a thorough investigation of EU companies’ environmental transparency. The National Consumer Protection Agency has been tasked with ensuring that businesses comply with all laws and regulations in their online marketing. To determine whether companies’ claims about their sustainability practices were misleading, the researchers screened for greenwashing.
The practice of greenwashing is a form of false advertising in which companies mislead consumers and lawmakers about their environmental sustainability efforts. During the course of their investigation, consumer protection authorities made a troubling discovery. The EU report indicates that “in 42% of cases the claims were exaggerated, false or deceptive and could potentially qualify as unfair commercial practices under EU rules”.
The number of companies that have been accused of greenwashing is staggering. Yet, even experienced marketers and communication strategists can unintentionally mislead the public. Overall, greenwashing is not new to the business world; it is industry-wide and international in scope.
Greenwashing Allegations
Investment
This year, the police raided one of Europe’s biggest and most-trusted banks – Deutsche Bank. The company’s DWS unit, one of the world’s leading asset managers, was the subject of controversy. All because DWS allegedly engaged in greenwashing, in which environmental, social, and governance (ESG) investments were sold under false pretenses.
Frankfurt public prosecutors’ office stated, “After examination, sufficient factual evidence has emerged that, contrary to the statements made in the sales prospectuses of DWS funds, ESG factors were not taken into account at all in a large number of investments”. DWS denies the allegations and notes that the greenwashing claims are unsupported by evidence. Despite the bank’s efforts to contain the damage resulting from the investigation, its stocks are going down. Negative press coverage can have serious consequences; DWS shares fell 5.8% and Deutsche Bank 1.9%.
Sports
The investment industry is not the only one facing criticism; FIFA has also been accused of greenwashing. Qatar, the host nation of the World Cup, has publicly claimed that the 2022 tournament is going to be carbon neutral. However, environmental activists and sustainability researchers disagree. The Carbon Market Watch report criticized the claim, calling it “creative accounting”. The association pulled apart Qatar’s analysis, as the emissions of six brand new stadiums were calculated by dividing the number of days in the tournament over the lifetime of each stadium. However, as Qatar built stadiums only for the duration of the World Cup, experts estimate the actual carbon footprint to be significantly higher.
Fashion
The fashion industry is also under fire. The Business of Fashion sustainability survey uncovered that the top 30 fashion companies scored no more than 49 out of 100 on a scale of sustainability. The survey contained questions regarding greenhouse gas emissions, water pollution, waste, chemicals, and transparency of sustainable activities. Aside from Puma, most well-known brands were not especially successful in their sustainability efforts, counting transparency problems related to greenwashing. Hence, no industry is immune to conveying a false environmental impression, which can have negative implications for the company’s future.
Two Central Problems Associated with Greenwashing
Sharing too much. It is quite expensive to be accused of misleading the public. Many actors, including NGOs, environmental groups, policy-makers, investors, journalists, and most importantly, clients, will review your communications for any inconsistencies or violations of policy and take appropriate actions. Almost half of the sustainability claims in the EU are not backed by action, which prompts regulatory authorities to roll out harsher measures. The consequences of an accusation can be catastrophic. For instance, in France, an ecological awakening association created an advent calendar based on the Linkedin survey, where users voted for the worst greenwashing ad in 2021. Hence, legal implications and the damage to the company’s reputation are equally severe. Therefore, losing the trust of consumers due to adverse media coverage and negative word of mouth can be detrimental to any company.
Sharing too little. Failing to speak up about a company’s environmental record can do just as much harm. The fear of greenwashing can lead marketers to a trap of miscommunication. As greenwashing regulations are often vague, a company might decide to abandon the idea of promoting its efforts toward becoming greener. Failing to communicate any sustainability-oriented messages may harm a brand’s image, leaving it vulnerable to competitors. A green brand image is no joke; researchers suggest that over a third of customers are willing to pay more for a sustainable option. Thus, the brand must still consider environmental messaging important instead of abandoning it altogether. But how can a business not fall into a greenwashing trap?
Improve Corporate Sustainability Communication
Marketing strategists must carefully navigate brand positioning and customer experience domains. Branding experts should integrate sustainable communication accounting to ensure the company is transparent in its environmental messaging.
Set Attainable Environmental Goals
A sustainable brand image requires developing environmental objectives that are both realistic and achievable. Setting clear green goals and creating a monitoring and evaluation framework to track your progress is a good first step. Transparency allows a company to effectively communicate its objectives and priorities with stakeholders. Investors will thoroughly vet a company’s projections to determine whether they are attainable. Notably, to avoid greenwashing charges, stakeholders evaluate environmental goals extra carefully. Hence, clarity and honesty are important.
Co-create Your Brand Strategy
A brand image must align with consumer preferences and a company’s vision for sustainability. Hence, it is crucial to involve both internal and external stakeholders in product strategy development. For example, The Body Shop organized a series of meetings with young activists for the purpose of rethinking its approach to sustainability. Hence, by working together to establish attainable goals, the company can foster collaboration and build trust with different parties.
Refer to Communication Guidelines That Work
Marketers should follow a set of clearly defined policies when communicating environmental efforts. France and the UK have released communication guidelines for companies seeking to promote a sustainable image. The countries outlined policies that companies can use while developing marketing strategies as well as creating briefs. The marketing team should also consider working together with sustainability experts who can guide them in the most effective ways to raise awareness about the brand’s environmental efforts. In light of this, it is often advised to consult professional guidelines or to seek help from environmental experts.