Greenwashing


Greenwashing, also called "green sheen", is a form of marketing spin in which green PR and green marketing are deceptively used to persuade the public that an organization's products, aims and policies are environmentally friendly and therefore ‘better’; appeal to nature. Common examples present in the marketing of food products, alternative medicine and natural medicine.
Evidence an organization is greenwashing often comes from pointing out the spending differences: when significantly more money or time has been spent advertising being "green", than is actually spent on environmentally sound practices. Greenwashing efforts can range from changing the name or label of a product to evoke the natural environment on a product containing harmful chemicals to multimillion-dollar marketing campaigns portraying highly polluting energy companies as eco-friendly. Greenwashing is therefore a "mask" used to cover-up unsustainable corporate agendas and policies.
Highly public accusations of greenwashing have contributed to the term's increasing use.
While greenwashing is not new, its use has increased over recent years to meet consumer demand for environmentally friendly goods and services. The problem is compounded by lax enforcement by regulatory agencies such as the Federal Trade Commission in the United States, the Competition Bureau in Canada, and the Committee of Advertising Practice and the Broadcast Committee of Advertising Practice in the United Kingdom.
Critics of the practice suggest the rise of greenwashing, paired with ineffective regulation, contributes to consumer skepticism of all green claims, and diminishes the power of the consumer in driving companies toward greener solutions for manufacturing processes and business operations. Many corporate structures use greenwashing as a way to repair public perception of their brand. The structuring of corporate disclosure is often set up so as to maximize perceptions of legitimacy. However, a growing body of social and environmental accounting research finds, in the absence of external monitoring and verification, greenwashing strategies amount to corporate posturing and deception.

Usage

The term greenwashing was coined by New York environmentalist Jay Westervelt in a 1986 essay regarding the hotel industry's practice of placing placards in each room promoting reuse of towels ostensibly to "save the environment." Westervelt noted in most cases, little or no effort toward reducing energy waste was being made by these institutions—as evidenced by the lack of cost reduction this practice effected. Westervelt opined the actual objective of this "green campaign" on the part of many hoteliers was, in fact, increased profit. Westervelt thus labeled this and other outwardly environmentally conscientious acts with a greater, underlying purpose of profit increase as greenwashing.
In addition, the political term "linguistic detoxification" describes when, through legislation or other government action, the definitions of toxicity for certain substances are changed, or the name of the substance is changed, so that fewer things fall under a particular classification as toxic. The origin of this phrase has been attributed to environmental activist and author Barry Commoner.
Similarly, introduction of a Carbon Emission Trading Scheme may feel good, but may be counterproductive if the cost of carbon is priced too low, or if large emitters are given "free credits." For example, Bank of America subsidiary MBNA offers an Eco-Logique MasterCard for Canadian consumers that rewards customers with carbon offsets as they continue using the card. Customers may feel that they are nullifying their carbon footprint by purchasing polluting goods with the card. However, only 0.5 percent of purchase price goes into purchasing carbon offsets, while the rest of the interchange fee still goes to the bank.
Such campaigns and marketing communications, designed to publicize and highlight organizational CSR policies to various stakeholders, affect corporate reputation and brand image, but the proliferation of unsubstantiated ethical claims and greenwashing by some companies has resulted in increasing consumer cynicism and mistrust.

History

In the mid 1960s, the environmental movement gained momentum. This popularity prompted many companies to create a new green image through advertising. Jerry Mander, a former Madison Avenue advertising executive, called this new form of advertising "ecopornography."
The first Earth Day was held on April 22, 1970. This encouraged many industries to advertise themselves as being friendly to the environment. Public utilities spent 300 million dollars advertising themselves as clean green companies. This was eight times more than the money they spent on pollution reduction research.
In 1985, the Chevron Corporation launched one of the most famous greenwashing ad campaigns in history. Chevron's "People Do" advertisements were aimed at a "hostile audience" of "societally conscious" people. Two years after the launch of the campaign, surveys found people in California trusted Chevron more than other oil companies to protect the environment. In the late 1980s The American Chemistry Council started a program called Responsible Care, which shone light on the environmental performances and precautions of the group's members. The loose guidelines of responsible care caused industries to adopt self-regulation over government regulation.
In 1991, a study published in the Journal of Public Policy and Marketing found that 58% of environmental ads had at least one deceptive claim. Another study found that 77% of people said the environmental reputation of company affected whether they would buy their products. One fourth of all household products marketed around Earth Day advertised themselves as being green and environmentally friendly. In 1998 the Federal Trade Commission created the "Green Guidelines," which defined terms used in environmental marketing. The following year the FTC found that the Nuclear Energy Institute claims of being environmentally clean were not true. The FTC did nothing about the ads because they were out of their jurisdiction. This caused the FTC to realize they needed new clear enforceable standards. In 1999, according to environmental activist organizations, the word "greenwashing" was added to the Oxford English Dictionary.
In 2002, during the World Summit on Sustainable Development in Johannesburg, the Greenwashing Academy hosted the Greenwash Academy Awards. The ceremony awarded companies like BP, ExxonMobil, and even the US Government for their elaborate greenwashing ads and support for greenwashing.
More recently, social scientists have been investigating claims of and the impact of greenwashing. In 2005, Ramus and Monteil conducted secondary data analysis of two databases to uncover corporate commitment to implementation of environmental policies as opposed to greenwashing. They found while companies in the oil and gas are more likely to implement environmental policies than service industry companies, they are less likely to commit to fossil fuel reduction.
In 2010 a study was done showing that 4.5% of products tested were found to be truly green as opposed to 2% in 2009. In 2009 2,739 products claimed to be green while in 2010 the number rose to 4,744. The same study in 2010 found that 95% percent of the consumer products claiming to be green were not green at all.
Greenwashing practices have also a significant impact on the perceptions of stakeholders in general. A recent study has analysed this issue because the effect on perceptions of the effective social and environmental responsibility of companies, the possible presence of misleading practices and the intentions following an environmental scandal creates significant distortions in the market, in the economic system, as well as increasing the information asymmetry between companies and stakeholders.

Regulation

Australia

The Australian Trade Practices Act has been modified to include punishment of companies that provide misleading environmental claims. Any organization found guilty of such could face up $6 million in fines. In addition, the guilty party must pay for all expenses incurred while setting the record straight about their product or company's actual environmental impact.

Canada

Canada's Competition Bureau along with the Canadian Standards Association are discouraging companies from making "vague claims" towards their products' environmental impact. Any claims must be backed up by "readily available data."

Norway

has targeted automakers who claim that their cars are "green," "clean" or "environmentally friendly" with some of the world's strictest advertising guidelines. Consumer Ombudsman official Bente Øverli said: "Cars cannot do anything good for the environment except less damage than others." Manufacturers risk fines if they fail to drop the words. Øverli said she did not know of other countries going so far in cracking down on cars and the environment.

U.S.

The Federal Trade Commission provides voluntary guidelines for environmental marketing claims. These guidelines give the FTC the right to prosecute false and misleading advertisement claims. The green guidelines were not created to be used as an enforceable guideline but instead were intended to be followed voluntarily. Listed below are the green guidelines set by the FTC.

  • Qualifications and disclosures: The Commission traditionally has held that in order to be effective, any qualifications or disclosures such as those described in these guides should be sufficiently clear, prominent and understandable to prevent deception. Clarity of language, relative type size and proximity to the claim being qualified, and an absence of contrary claims that could undercut effectiveness, will maximize the likelihood that the qualifications and disclosures are appropriately clear and prominent.
  • Distinction between benefits of product, package and service: An environmental marketing claim should be presented in a way that makes clear whether the environmental attribute or benefit being asserted refers to the product, the product's packaging, a service or to a portion or component of the product, package or service. In general, if the environmental attribute or benefit applies to all but minor, incidental components of a product or package, the claim need not be qualified to identify that fact. There may be exceptions to this general principle. For example, if an unqualified "recyclable" claim is made and the presence of the incidental component significantly limits the ability to recycle the product, then the claim would be deceptive.
  • Overstatement of environmental attribute: An environmental marketing claim should not be presented in a manner that overstates the environmental attribute or benefit, expressly or by implication. Marketers should avoid implications of significant environmental benefits if the benefit is in fact negligible.
  • Comparative claims: Environmental marketing claims that include a comparative statement should be presented in a manner that makes the basis for the comparison sufficiently clear to avoid consumer deception. In addition, the advertiser should be able to substantiate the comparison.

The FTC has said in 2010 that it will update its guidelines for environmental marketing claims in an attempt to reduce greenwashing. The revision to the FTC's Green Guides covers a wide range of public input, including hundreds of consumer and industry comments on previously proposed revisions. The updates and revision to the existing Guides include a new section of carbon offsets, "green" certifications and seals renewable energy and renewable materials claims. According to FTC Chairman Jon Leibowitz, "The introduction of environmentally friendly products into the marketplace is a win for consumers who want to purchase greener products and producers who wants to sell them." Leibowitz also says the win-win can only claim if marketers' claims are straightforward and proven.
In 2013, the FTC began enforcing the revisions put forth in the Green Guides. The FTC cracked down on six different companies, in which five of the cases were concerned with the false or misleading advertising surrounding the biodegradability of plastics. The FTC charged ECM Biofilms, American Plastic Manufacturing, CHAMP, Clear Choice Housewares, and Carnie Cap, for misrepresenting the biodegradability of their plastics treated with additives.
The FTC charged a sixth company, AJM Packaging Corporation, for violating a commission consent order put in place that prohibits companies from using advertising claims based on the product or packaging being "degradable, biodegradable, or photodegradable" without reliable scientific information. The FTC now requires companies to disclose and provide the information that qualifies their environmental claims to ensure transparency.

Examples

Organizations and individuals are making attempts to reduce the impact of greenwashing by exposing it to the public. The Greenwashing Index, created by the University of Oregon in partnership with EnviroMedia Social Marketing, allows examples of greenwashing to be uploaded and rated by the public. The British Code of Advertising, Sales Promotion and Direct Marketing has a specific section targeting environmental claims.
According to some organizations opposing greenwashing, there has been a significant increase in its use by companies over the last decade. TerraChoice Environmental Marketing, an advertising consultancy company, issued a report denoting a 79% increase in the usage of corporate greenwashing between 2007 and 2009. Additionally, it has begun to manifest itself in new varied ways. Within the non-residential building products market in the United States, some companies are beginning to claim that their environmentally minded policy changes will allow them to earn points through the U.S. Green Building Council's Leadership in Energy and Environmental Design rating program. This point system has been held up as an example of the "gateway effect" that the drive to market products as environmentally friendly is having on company policies. Some have claimed that the greenwashing trend may be enough to eventually effect a genuine reduction in environmentally damaging practices.
According to the Home and Family Edition, 95% consumer products claiming to be green were discovered to commit at least one of the "Sins of Greenwashing". The Seven Sins of Greenwashing are as follows:
  1. Sin of the Hidden Trade-off, committed by suggesting a product is "green" based on an unreasonably narrow set of attributes without attention to other important environmental issues.
  2. Sin of No Proof, committed by an environmental claim that cannot be substantiated by easily accessible supporting information or by a reliable third-party certification.
  3. Sin of Vagueness, committed by every claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the consumer.
  4. Sin of Worshiping False Labels is committed when a claim, communicated either through words or images, gives the impression of a third-party endorsement where no such endorsement exists.
  5. Sin of Irrelevance, committed by making an environmental claim that may be truthful but which is unimportant or unhelpful for consumers seeking environmentally preferable products.
  6. Sin of Lesser of Two Evils, committed by claims that may be true within the product category, but that risk distracting consumers from the greater environmental impact of the category as a whole.
  7. Sin of Fibbing, the least frequent Sin, is committed by making environmental claims that are simply false.
In 2008, Ed Gillespie identified "ten signs of greenwashing", which are similar to the Seven Sins listed above, but with three additional indicators.
  1. Suggestive pictures - Images that imply a baseless green impact, such as flowers issuing from the exhaust pipe of a vehicle.
  2. Just not credible - A claim that touts the environmentally friendly attributes of a dangerous product, such as cigarettes.
  3. Gobbledygook - The use of jargon or information that the average person can not readily understand or be able to verify.
Companies may pursue environmental certification to avoid greenwashing through independent verification of their green claims. For example, the Carbon Trust Standard launched in 2007 with the stated aim "to end 'greenwash' and highlight firms that are genuine about their commitment to the environment".

Psychology

Greenwashing is a relatively new area of research within psychology and there is little consensus between studies on how greenwashing affects consumers and stakeholders. Because of the variance in country and geography in recently published studies, discrepancy between consumer behavior in studies could be attributed to cultural or geographic differences.

Greenwashing's Effect on Consumer Perception

Researches found that products that are truly environmentally-friendly are perceived significantly more favorably than their greenwashed counterparts. Consumers are more likely to perceive the price of an item marketed as green as a sacrifice when evaluating greenwashed products. Consumer perceptions of greenwashing are also found to be mediated by the level of greenwashing they are exposed to. Other research suggests that few consumers actually notice greenwashing, particularly when they perceive the company or brand as reputable. When consumers perceive green advertising as credible, they develop more positive attitudes towards the brand, even when the advertising is greenwashed. Consumers are not aware of greenwashing in advertising, and trust green advertisements even when they are deceptive. Still other research suggests that consumers with higher green concern are more able to tell the difference between honest green marketing and greenwashed advertising; the higher the green concern, the stronger the intention will be for not purchasing from companies from which they perceive greenwashing advertising behavior. When consumers use word-of-mouth to communicate about a product, green concern strengthens the negative relationship between the consumer's intent to purchase and the perception of greenwashing.

Attributions of Greenwashing

Consumer perception of green advertisements and greenwashing alike is impacted by where consumers attribute the green messaging. Eco-labels can be given to a product both from an external organization and by the company itself, which has raised concerns considering that companies are able to label a product green or environmentally friendly by selectively disclosing positive attributes of the product while not disclosing negative environmental impacts.  Consumers expect to see eco-labels from both internal and external sources but perceive labels from external sources to be more trustworthy. Researchers from the University of Twente found that uncertified or greenwashed internal eco-labels may still contribute to consumer perceptions of a responsible company, with consumers attributing internal motivation to a company’s internal eco-labeling. Other research connecting attribution theory and greenwashing found that consumers will often perceive green advertising as greenwashing when companies use green advertisements, attributing the green messaging to corporate self-interest. Green advertising can backfire and is perceived negatively especially when the advertisement or environmental claim does not match a company’s actual environmental engagement.

Implications for Green Business

The majority of researchers working with consumer perception, psychology, and greenwashing note that in order for companies to avoid the negative connotations and perceptions of greenwashing, companies should ‘walk the walk’ when it comes to green advertising and green behavior. Green marketing, labeling, and advertising is found to be most effective when it matches a company’s actual environmental engagement. This is also mediated by the visibility of those environmental engagements, meaning that if consumers are unaware of a company’s commitment to sustainability or environmentally-conscious ethos, they are unable to factor greenness in their assessment of the company or product.

The Limits of Greenwashing on Consumer Perception

Research suggests that consumers’ willingness to purchase green decreases when they perceive the green attributes compromise the product quality, making greenwashing potentially risky, even when the consumer or stakeholder is not skeptical of the green messaging. Words and phrases often used in green messaging and greenwashing, such as “gentle,” can lead consumers to believe the green product is less effective than a non-green option.