In recent years, increased awareness of environmental sustainability has encouraged many companies to market their products as “environmentally friendly.” However, there are many who engage in greenwashing, a misleading practice in which companies claim their products are greener than they really are in order to attract consumers. This can occur through false labeling, exaggerated advertising, or concealment of the true environmental impact. The greenwashing phenomenon not only harms consumers who are deceived by false claims, but also hampers global efforts to preserve the environment.
The Origin of the Term Greenwashing
The term greenwashing originated from Jay Westerveld, an environmental activist who was visiting a hotel in Fiji in 1983. At that time, Westerveld noticed that guests were asked to reuse their towels as a campaign to “preserve the environment” on the grounds that reusing towels would reduce ecological damage to the oceans and coral reefs (Watson, 2016). This policy itself contradicted the actions of the hotel, which at the time was undergoing a major expansion in a sensitive island ecosystem. Westerveld suspected the campaign was simply a hotel strategy to reduce the operational costs of towel laundry (Lindwall, 2023).
The Oxford English Dictionary (2023) defines greenwash as a way “To mislead (the public) or counter (public or media concerns) by falsely representing a person, company, product, etc., as being environmentally responsible”. Simply put, greenwashing is a lie that an entity tells to carry out their destructive business practices.
Various Types of Greenwashing
Greenwashing can be classified into two forms, namely claim greenwashing and executional greenwashing (De Freitas Netto et al., 2020). Claim greenwashing itself is the form most often carried out by an entity, which refers to a claim of ecological benefits made by a company of a product or service to make misleading environmental claims. To raise consumer awareness of the forms of greenwashing claims, there is a campaign called “the Seven Sins of Greenwashing”. Green Business Benchmark (2021) outlines the seven “sins”, including:
The Sin of the Hidden Trade-Off | Describes a situation in which an environmental problem appears to have been solved, but this solution contributes to other worrying problems. |
The Sin of No Proof | Describes environmental claims without supporting factual data or third-party certification. |
The Sin of Vagueness | Describes non-specific environmental claims using words such as green, sustainable, and environmentally friendly, without specific explanations to justify their use and are considered meaningless. |
The Sin of Worshipping False Labels | Describes the creation of fake certifications or labels to mislead consumers into believing that a product or service has gone through a legitimate green screening process. |
The Sin of Irrelevance | Describing products and services that advertise environmental features that are clearly irrelevant because they do not represent a strategic business shift, cultural change, or change in core values to operate in a more environmentally friendly manner. |
The Sin of Lesser of Two Evils | Describes the environmental benefits of a product or service, which does not have environmental benefits initially. |
The Sin of Fibbing | Describes environmental claims that are completely wrong. |
Furthermore, there is a categorization of the forms of violations committed by companies in conducting greenwashing. This is as described by Berrone (in Contreras-Pacheco & Claasen, 2017) which explains five ways for companies to commit greenwashing violations, including:
Dirty Business | Becoming part of a business that is basically unsustainable, but promoting sustainable practices or products that are not representative of the business or society. |
Ad Bluster | Distract attention from sustainability issues through the use of advertising. This is used to exaggerate achievements or present alternative programs that are not relevant to the main sustainability issues. |
Political Spin | Influencing regulators or governments to gain advantages that influence sustainability. Usually, this is “justified” because of the companys character as a large taxpayer or employer. |
It’s the Law, s****d! | Declare the achievement or commitment to sustainability that is required by existing laws or regulations. |
Fuzzy Reporting | Utilize sustainability reports and their nature as a one-way communication channel to distort the truth or project a positive image in terms of the companys CSR practices. |
In addition to the claim of greenwashing, there is also executional greenwashing. This form of greenwashing is done not by claim but by using elements that evoke the spirit of nature, such as images that use colors (e.g., green and/or blue), or sounds (e.g., sea and/or birds). This can also be done by companies by using backgrounds that represent natural landscapes (e.g., mountains, forests, oceans) or images of endangered animal species (e.g., pandas, dolphins) or renewable energy sources (e.g., wind, waterfalls) (Parguel et al. in De Freitas Netto et al., 2020).
How is Greenwashing Used in Corporate Campaigns?
The practice of greenwashing, which is often carried out by these companies, is no longer surprising. Many big-name companies are involved in this greenwashing scandal, including Volkswagen (VW) and Procter & Gamble (P&G).
(Source: Jae C. Hong/AP)
One of the most famous greenwashing scandals is “Dieselgate” committed by a well-known automotive manufacturer, Volkswagen (VW). VW did this by campaigning for “clean diesel” as an alternative to hybrid or electric vehicles. VW conducted tests in their laboratory which showed that the vehicles they produced operated cleanly and safely. This was possible because when conducting the tests, they ran them in a state where the vehicle was in “safety mode”, which resulted in the vehicles engine working under normal power and performance. In fact, when the car is running in normal mode (exiting “safety mode”), the engine switches out of this test mode, in which the vehicle is known to produce nitrogen oxide pollutants up to 40 times more than what is allowed in the US market (Hotten, 2015).
This was later discovered by the Environmental Protection Agency (EPA), which found that around 482,000 VW vehicles sold in America had “defeat device” software that changed the emissions output of the vehicle. VW also admitted that around 11 million cars worldwide, including 8 million in Europe, were fitted with the so-called “defeat device”. As a result, VW has suffered significant losses, starting with the EUR 6.7 billion set aside to cover the cost of recalling millions of cars worldwide. This caused VW to post a quarterly loss for the first time in 15 years, totaling EUR 2.5 billion at the end of October. It didnt stop there, the EPA had the authority to fine VW USD 37,500 for each vehicle that violated the standard, with a maximum fine of around USD 18 billion (Hotten, 2015).
(Source: Gain)
Another example is the “Gain” detergent product produced by Procter & Gamble (P&G). The product is suspected of performing executional greenwashing by using bright green packaging on its products, followed by the display of images in the style of flowers, butterflies, and also leaves, which make the product appear environmentally friendly. In fact, if you look deeper into the composition of the product, there is a substance called dioxane, which the National Institutes of Health (NIH) and the Environmental Protection Agency (EPA) recognize as a “probable human carcinogen”. This toxic organic compound can accumulate in the body over time, and has a high likelihood of causing cancer in humans, although there is not enough evidence to be completely convinced from human research. In response to this incident, P&G was sued by ClassAction, which claimed that P&G had misled consumers by implying that “Gain” laundry detergent was an environmentally friendly product, even though it contained high levels of the toxin dioxane (McCroskey, 2023).
(Source: Lufthansa)
The greenwashing scandal also affects the carbon market. A study by De & Rosario (2024) evaluated the authenticity, verification, and alignment of Voluntary Carbon Offset (VCO) claims made by eighteen European airlines, and aligned them with proposed EU regulations specifically targeting greenwashing practices. The study found that European airlines engaged in greenwashing practices in their VCO programs, as evidenced by the insignificance and misalignment of these programs, which indicates that they were implemented without having a substantial impact on the airlines mitigation efforts and were not integrated into their strategies.
The Impact of Greenwashing on Consumers
A study was conducted by GreenPrint (in Sustainable Brands, 2022) of more than 1,000 adults in the United States, which concluded that two-thirds (or around 66%) of people are willing to pay more for a product that campaigns for sustainability than less sustainable competitors. This shows the potential of consumers who are increasingly aware of a sustainable business to prevent more severe climate change. Unfortunately, this is then exploited by many companies by implementing greenwashing practices to simply grab market share. This will affect the trust of consumers who will feel deceived, so they will become more skeptical and distrustful of sustainability campaigns and solutions, even including real campaigns (Kusuma, 2023).
Greenwashing activities carried out by a company can have various negative impacts, such as misleading consumers. Consumers may believe that the products made by the company can be said to be environmentally friendly, and then they pay more for these products. In fact, the products are not environmentally friendly at all. Another negative impact of greenwashing is health and safety risks. The products produced by the company may contain chemicals or hazardous materials, and may not be as durable as claimed. In this case, greenwashing no longer just involves outright lies, but also concealing information by not revealing it at all, burying it in a pile of data, or renaming problematic substances (Tyagi, 2023).
Ultimately, consumer distrust of these “green” products can hinder and delay the real changes that have been made so far. This can make it difficult for sustainable businesses to succeed and can delay the transition to a more sustainable economy.
Companys Commitment to Avoid Greenwashing
If a company really wants to create environmentally friendly products, there are a number of steps it can take. Companies must already begin their transition to cleaner and more sustainable production. This can be done by using more renewable or recycled raw materials, and also ensuring that the products made have a long lifespan so that they do not quickly become waste. Companies must also strive to use environmentally friendly energy in their production processes, and also minimize waste from the production of the resulting products.
(Source: Conscious Travel Guide)
After that, companies must also ensure that their products are truly environmentally friendly by having them certified by an independent party. This can be a guarantee from the company to its consumers that they really do make environmentally friendly products. The following are certifications that companies can obtain based on the type of industry sector:
NAME OF CERTIFICATION | SECTOR | FUNCTION |
Forest Stewardship Council (FSC) | Wood & Paper Products | Guarantee that wood and paper come from sustainably managed forests. |
Fairtrade | Food & Beverages | Ensuring that products are grown, harvested, produced, and traded in a way that protects the environment and improves the lives of those who work with these products at every point. |
Marine Stewardship Council (MSC) | Fisheries & Maritime | Certification for fishery products that guarantees that the catch comes from sustainable practices, does not damage the marine ecosystem, and supports sustainable fish stocks. |
OEKO-TEX | Textiles & Garments | Guarantee that textiles are free from substances that are harmful to human health. |
Energy Star | Electronics & Home Appliances | Certification for energy-efficient and low-carbon electronic devices. |
Leadership in Energy and Environmental Design (LEED) | Building & Construction | Environmentally friendly building standards that optimize energy and water efficiency. |
ISO 50001 | Energy & Management | International standards for energy management to improve efficiency. |
Rainforest Alliance | Agriculture & Plantation | Support agricultural and forestry practices that protect the environment and workers. |
Cosmetic Organic Standard (COSMOS) | Cosmetics & Beauty Products | Standards for organic and natural cosmetics. |
To ensure transparency in sustainable business practices, companies need to publish a publicly accessible Sustainable Report. This report should cover the environmental and social impacts of business operations, the use of resources such as energy and water, and carbon emission reduction strategies. In addition, this report should also follow international standards such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB), so that companies have clear benchmarks in communicating their sustainability efforts. With a structured and data-based report, consumers and investors can assess the extent to which companies are truly committed to environmentally friendly practices.