Greenwashing

Greenwashing: Misleading Consumers with “Green Marketing”

In today’s hyper consumption-based societies, greenwashing has often become a controversy in the context of corporate social responsibility (CSR), in which a fine line can easily be crossed between the promised results and the actual results delivered. Greenwashing, modelled on “whitewashing” (referring to the cover-up of crimes, vices and scandals), is a form of marketing spin based on green marketing by providing biased interpretation to influence the public’s opinion and feelings about a company, thus deceptively distorting the company’s original objectives into environmentally-friendly initiatives, which are more appealing and approachable to the public. Essentially, greenwashing means giving false impressions or conveying misleading information to the public about how a company is geared towards green sustainability, but in reality, it is merely a symbolic reference where the actual outcomes are so little compared to what has been promised, and confuse the public concerning the issue that is attempted to be solved. Greenwashing, for example, is when a company spends more time and money claiming to be “green” and “sustainable” through marketing gimmicks, rather than implementing effective business practices that minimize environmental damage or create sustainable impact. 

Actual Case of Greenwashing – Fiji Water 

Let’s have a look into a prime example of greenwashing by Fiji Water. Fiji Water is famous for its brand identity, of which the bottled water is derived, bottled and shipped from Fiji, with the water coming from an artesian aquifer in Veti Levu (Fiji). In 2011, Fiji Water was slammed to encapsulate the essence of greenwashing, because of its bottled water marketing campaigns and commercials, typically filmed in a delightful natural setting, clashing with the reality of the plastic packaging, the carbon emissions from transporting the bottles globally, and the landfill waste after its fleeting consumption. To bring Fiji Water’s negative impact on strong relief, according to the World Health Organization (WHO), 47% of people living in Fiji do not have access to clean and safe drinking water. This consequently led to a lawsuit – a U.S. District Court class-action suit filed by a Newport, California firm on behalf of a Santa Ana woman named Desiree Worthington, accusing Fiji Water of using a practice known as “forward crediting”, essentially claiming credits for carbon reduction that may or may not take place, up to several decades in the future. In the lawsuit, Worthington argued that she purchased Fiji Water specifically for its self-titled “carbon-negative” brand label, and expected that the label meant that Fiji Water was currently reducing more carbon emissions than it was producing, which was supposed to be consistent with the company’s view to offset 120% of carbon emissions, as stated in the company website. However, under the forward crediting model, the offsets do not need to be currently occurring, as they can simply be anticipated actions, for which Fiji Water has said in a press release previously (2008) that the offsets promised to be “carbon-negative” will not be realized until the year 2037.

Fiji Water attempts to reimagine its bottled water as the essence of nature, and with the greenwashed marketing tactics, Fiji pursues environmentally conscious consumers by framing its water bottles as a completely green and sustainable product. Through greenwashing practices, Fiji Water succeeded in framing the purchase of Fiji bottled water as a way to reduce carbon emissions and save the Fijian rainforests, by telling the consumers a one-sided story that appeals to their moral conscience, when in fact, their products are inextricably tied to pollution outcome, which leads to high carbon emissions and deforestation. 

Adverse Effects of Greenwashing Practices

According to the studies by Cone Environmental Survey (2009), it shows that consumers’ attitudes and perceptions of environmentally responsible products remain strong apart from a weak economy during that particular period. In Nielsen Media Research (2015), 66% of global consumers are proven to be willing to pay more for environmentally friendly products, especially when the company is perceived to be socially responsible. Over the years, more and more consumers become aware of environmental sustainability in their purchasing decisions, yet at the same time, the consumers remain sceptical of the green messages delivered through the company’s brand image and marketing campaigns. In Webb and Mohr’s (1998) study, half of the respondents indicated that they have negative attitudes and perceptions towards cause-related marketing, with the scepticism resulting from the company’s self-interested motives rather than altruistic motives of supporting causes for conducting such campaign, for example, to increase sales and gain more profits. As a further study extended by Anuar, Omar and Mohamad (2013), the study revealed that highly sceptical consumers tend to evaluate cause-related marketing negatively, as they are most likely to perceive cause-related marketing to be cause-exploitative rather than cause-beneficial, and this interpretation does affect their final purchasing decisions.

Thus, greenwashing, being a corporate ethical dilemma, has disastrous consequences, evident as most stakeholders, especially consumers, communities, NGOs and public authorities, are increasingly vocal and in opposition towards this pretence of fraud. Greenwashing should be seen by all companies as a major concern, particularly in planning and implementing their CSR activities. Whether real or perceived, being labelled “greenwashed” ultimately causes the company to experience revenue downturn, devaluations, negative campaigns, media criticism and penalty fines. For instance, according to the study by Du (2015), greenwashing shows a negative relationship with companies’ cumulative abnormal returns (CAR) in the stock market, whereas reinforced corporate environmental performance shows a significantly positive relationship with CAR. Meanwhile, in a study of banks in 22 countries, Wu and Shen (2013) found a positive relationship between CSR and financial performance, but not for banks that practised greenwashing. Even if a company is not singled out, greenwashing by the competitors consequently impairs the industry and market performance (Davis, 1992). With the increase of green markets followed by greenwashing practices, more consumers are less likely to trust and support environmental initiatives through their purchasing decisions, as consumers fail to differentiate between valid and invalid claims, eventually hindering the development of a sustainable economy (Nyilasy et al., 2014). Despite the increased efforts from researchers all across the world to investigate the effects of greenwashing in marketing campaigns, the issue continues to persist due to the ineffective policies and lack of enforcement by the regulatory authorities, such as the Federal Trade Commission (FTC) in the U.S. and the Committee of Advertising Practice (CAP) in the U.K. For example, instead of mandatory policies, FTC provides voluntary guidelines for companies to follow for their green marketing claims, and this subsequently creates a gap between different companies in delivering sustainable development goals through their brands and products, which leads to the increasing number of misleading green promotional tools in the market. 

How to Spot Greenwashing? 

According to the U.K. Guide to Greenwash, there are 10 signs of greenwashing for consumers and businesses to avoid.

1. Beware of Fluffy Language, which provides an unclear meaning or objective, e.g. “eco-friendly”, “recyclable” or “all-natural”. 
2. Be Educated on ‘Dirty’ Companies, e.g. fast-fashion retailing companies (H&M) averagely takes about 20,000 litres of water to produce one kilogram of cotton, which is equivalent to one piece of t-shirt and a pair of jeans.
3. Beware of Suggestive Images used in marketing campaigns, e.g. green images indicating unwarranted and unjustified green impact, for example, flowers blooming or sea sparkling. 
4. Be Alert of Irrelevant Claims, where only one or few little green attributes are emphasized when everything else is neither green nor sustainable, e.g. aviation kerosene-based fuel is replaced with biofuel, but aircraft will still emit greenhouse gases regardless.
5. Beware of Name-Calling,  brands and products that claim to be more environmentally friendly or sustainable than their competitors. 
6. Evade Glamourized Claims on products of harmful nature or side effects, e.g. “eco-friendly cigarettes” or “vitamin-infused vodka”. 
7. Beware of Jargons in product packaging and marketing tools that the mass audience does not understand, e.g. baseline performance, Correx, emulsion, etc. 
8. Be Cautious of Misleading Labels that appear to be approved by authorized third parties, e.g.:
9. Avoid Relying on “Facts” that provide little or no evidence, e.g. some plastic products declare using recycled plastics in product packaging, without evidence on how many percents is actually recycled material. 
10. Shun the Company, Brand or Product that tells totally fabricated claims or data.

How should Companies Steer Clear of Greenwashing?

1. Implement Lifecycle Analysis (LCA) and metrics based on impacts generated during procurement, transportation and disposal. With the true impact assessed from its entire lifecycle, the company can develop well-delivered sustainability programs based on LCA and measurable data to reduce the likelihood of messages being considered greenwash. 
2. Improve traceability throughout the entire supply chain by establishing regulatory guidelines and selection criteria. For example, the company should be wary of the practices of its selected suppliers and partners, and also consider providing consumers with information that enables them to trace the various parties involved in the supply chain.
3. Establish effective and interactive internal communication through cross-functional meetings among different departments and management levels to foster enthusiasm and align sustainability goals. Through internal communication, the company can avoid greenwashing that could result from discrepancies between what one department is communicating and another department is doing.
4. Forge multi-company collaborations to raise industry standards, facilitate unified actions, and establish participating companies as drivers for improving sustainable practices.
5. Initiate partnerships with the relevant NGOs to engage in a continuous dialogue, gaining a broader understanding of the issues being resolved.
6. Be flexible in changing ethical approaches towards green sustainability with a clear focus on the message conveyed along with an appropriate engagement policy. 

Conclusion

Greenwashing has become more common in recent years, with more and more companies combining positive communication with poor environmental performance. Greenwashing can have a catastrophic impact on public confidence in green products and environmentally responsible companies, making the stakeholders reluctant to reward these businesses for actual sustainable achievements. This, in turn, increases the incentives for companies to engage in environmentally detrimental behaviour, which has been shown to create negative externalities and thus adversely affect social welfare. Therefore, all companies should steer clear of greenwashing practices by implementing actual effective sustainability policies in their day-to-day operations, to earn lasting trust from the consumers, as well as redefining the role of businesses in advancing towards a more sustainable environment. At the same time, as consumers, we should wisely utilise our collective power to steer companies towards more truthful and ethical products, by changing our habits and behaviours to support the more sustainable alternatives. 

Writer: Cherrish Ng

Reviewer: Vikky Beh

Editor: Stella

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