According to Delmas (UCLA) and Burbano (Columbia University) in a paper that studies the drivers behind greenwashing “Greenwashing refers to the act of misleading consumers regarding the environmental practices of a company (firm-level greenwashing) or the environmental benefits of a product or service (product-level greenwashing).” In 2020, the European Commission conducted analysis of websites to pinpoint instances of greenwashing and results showed that 42% of websites engaged with greenwashing behaviour to different severity levels. In addition to this, survey results from The Harris Poll for Google Cloud have shown that 58% of respondents from C-suite and VP-level executives at global corporations identify with corporate greenwashing at their respective companies.
In the U.S. alone, consumers are estimated to spend $150 billion on products marketed as sustainable or more sustainable than their competitors – often paying more per unit of product as a “green premium”. This trend in consumer behaviour does not seem to be dying anytime soon given the climate change agenda. To capitalise on this opportunity, many companies have upped the focus on sustainability themed marketing.
Delmas and Burbano (2011)
With a revitalized mindset for product value and corporate social responsibility amongst the “woke generation”, it might come as a surprise to many that greenwashing isn’t always a result of corporate trickery and malicious intent. Taxonomy, terminology and pedagogy in this space is still so underdeveloped that quite often companies who greenwash genuinely believe that their products or practices are environmentally superior to their peers. An example of this is beverage companies claiming to be more sustainable through plastic packaging recycling programs. On the surface this might seem in line with circular economy principles, but upon further inspection, the actual environmental impact is debatable as rates of certain plastics being reinjected into the economy after recycling are alarmingly low. Be it due to oversight or a lack of systems in place monitor impact of such programs, companies do not end up delivering the full potential of what they tell consumers.
As external regulatory bodies crack down on greenwashing, building up capabilities to track and measure impact will become increasingly important in overcoming organisational and psychological barriers. Such capabilities include but are not limited to educating employees, setting up environmental management systems, performing impact audits and actively engaging with external expertise.
At Lightwheel Advisors we want companies with good intentions to generate the outcome that they promise and prevent situations where goodwill gets marred by ineptitude. As we continue to navigate through this rapidly evolving space; connect with us to find out how your organisation can avoid behaviours that will potentially be recognised as greenwashing and build capacity to navigate pathways to actual positive impacts.
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