Greenwashing – pros and cons

Ladies and gentlemen, dear readers, hello friends of the t2informatik blog,

Today I am trying a balancing act: It is about greenwashing and the deliberate deception of consumers or customers. Deliberately deceiving people in order to generate advantages and profits is reprehensible. Reprehensible! And yet companies market their products and services by means of deception. Some might even call it marketing, but I don’t share that assessment. I would like to approach the topic of greenwashing and work out what possibly motivates companies to engage in it. Time for a balancing act, time for a look at motives and grey areas of corporate or product communication.

What is greenwashing?

The German Federal Environment Agency describes greenwashing as “the attempt by organisations to give themselves a green or sustainable image, particularly through measures in the field of communication and marketing, without actually systematically implementing corresponding sustainability-oriented activities in their operative business”.¹

And the Augsburger Allgemeine adds: “The term stands for a strategy with which companies or other actors create an image of ecological responsibility through the targeted dissemination of disinformation. This disinformation is not necessarily untrue. In many cases, a company’s ‘green claims’ are true, but the core business is usually not environmentally friendly. In this way, corporations divert attention from other problems caused by their products”.²

In short, greenwashing involves “behaviour or activities that give the impression that a company is doing more to protect the environment than it is actually doing”.³ And because this deceives consumers, there is now a proposal for a Directive of the European Parliament and of the European Council on the substantiation of explicit environmental claims and related communication (the Environmental Claims Directive or Green Claims Directive).⁴ One basis for the proposal is a study by the European Commission that examined 150 advertising claims and classified more than half of them as vague, misleading or unsubstantiated.⁵

Well, if there is even going to be a ban on greenwashing soon, companies had better stop relying on it, right?

Reasons against greenwashing

In addition to the future ban from Brussels, there is a whole series of reasons that already speak against greenwashing today:

• Those who deceive their customers endanger their product or company image, undermine trust in their company, jeopardise sales, jobs or partnerships. Regaining lost trust is a lengthy, costly undertaking with an uncertain outcome.
• Those who use their limited resources for superficial, misleading marketing measures instead of investing in genuinely sustainable practices and innovations are deliberately damaging the environment.
• Those who pretend to do something positive for the environment against their better judgement undermine the real pioneers of an industry who are trying to act sustainably. In some circumstances, this leads to a standstill in the development and implementation of genuine environmentally friendly practices or innovations.
• Last but not least, misleading consumers is illegal under competition law – namely the Unfair Competition Act (UWG). This opens the door to warnings by associations or even lawsuits by competitors.⁶

In short, the legal situation in Germany, the future ban in the European Union, conceivable losses of confidence and image, the danger of a drop in sales and high investments to eliminate possible consequences, as well as the actual damage to the environment speak a very clear language. The matter is clear: Hands off greenwashing!

Grey areas in corporate or product communication

There are numerous examples on the internet in which companies are accused of misleading users and consumers.⁷ This leads to three questions:

1. Does this mean that all companies that engage in greenwashing are also consciously choosing to do so?

Could it be that a company

• does not have sufficient knowledge or resources to implement comprehensive sustainability measures?
• unintentionally overstates the impact of its activities?
• underestimates the complexity of the issue or fails to monitor the impact of its activities at all levels?

Example: “For people and the environment” is the motto of the Federal Environment Agency (UBA). Certainly, the UBA is one of the leading organisations in Germany when it comes to linking people and the environment. The ability to adjust the contrast for people with visual impairments at the touch of a button on the website, for example, is spectacular.⁸ Of course, UBA does not engage in greenwashing; countless publications, classifications and explanations impressively prove this. But what the Federal Environment Agency pays less attention to is the CO₂ footprint of its website. Unfortunately, it is really bad.⁹ It is obviously not always easy to do justice to aspirations and reality at all levels and in all areas. In other words: it’s a balancing act!

2. Is there a discrepancy between self-perception and external perception?

Do you know companies that you are sure are greenwashing? Maybe one or two companies immediately come to mind, or maybe you just have a vague feeling that most companies are simply doing it.

• According to the Change Readiness Index 2022, 19% of companies surveyed consider themselves to have an active green strategy and 77% describe themselves as green followers.¹⁰
• According to a survey by data platform Dynata, 66% of consumers believe that while companies say they care about the environment, their actions do not match their words.¹¹

Could it be that people make harsh judgements when it comes to other people or organisations? Could it be that there is a difference between self-perception and the perception of others? Regardless of how valid and comparable such surveys are in detail, a discrepancy between “we are changing something” and “there is more talk than action” seems obvious.

3. How can greenwashing be recognised?

• How many hours does a cow have to graze on a meadow so that the depiction of this situation on a milk package does not mislead consumers?
• Is it okay to advertise a “green” product from one range when the rest of the range is less “green”?
• Is the use of phrases such as environmentally or climate friendly allowed if manufacturers compensate for possible environmental impacts with the help of certificates?

Maybe the world of corporate and product communication is not always black or white, maybe it moves – consciously or unconsciously – in the grey area most of the time.

Motives for greenwashing

So what are the arguments in favour of greenwashing? With all the contra, where is the pro?

I would love to shout out loud “There is no pro!” or “Nothing speaks for greenwashing!”, but the motives result from the inversion of the previous arguments:

• If criteria for crystal-clear classification are lacking, i.e. if there is a large grey area, why should companies not exploit it?
• If consumers almost universally suspect or even assume greenwashing, does it not make sense to actually do it?
• If there is a lack of transparency as to who is “guilty”, why shouldn’t companies try?
• If there are no significant penalties – it will be a long time before the new ban takes effect in the European Union, the first loopholes are addressed and closed, and the first judgements are handed down – why shouldn’t companies do the same to their competitors?
• If consumers or users can be manipulated so easily, why shouldn’t companies boost sales and secure jobs?
• If customers or buyers are willing to pay more money for “green” products or services, why shouldn’t companies use this to increase profits in the short term?
• If customer retention and trust in good products or services is high, why should companies fear that female customers will opt for other solutions?
  If their own behaviour is holding back industry pioneers who really want to be sustainable, isn’t this manifesting the status quo and providing rosy opportunities with little risk?
• If buyers or users are too comfortable to deal with “real” eco-labels, why shouldn’t companies invent their own labels or buy corresponding classifications?
• If the price of the product is more important than how it is produced, why should companies pay much attention to environmentally sound or sustainable practices?
• If people superficially pay attention to “green” ingredients or bogus arguments like “climate-friendly”, why shouldn’t companies provide them?

A frightening number of motives that companies can cite, isn’t it? And if you now also consider that business life, especially for corporations, takes place in short intervals in which they have to publish quarterly figures and be accountable to their shareholders, then it is also hardly surprising if short-term greenwashing looks much more attractive and lucrative than a medium- to long-term investment in the environment and sustainability.

Doing the right thing

There are grey areas in corporate and product communication and there are motives why companies greenwash. Unfortunately, I cannot give you any advice on what to do if you work in a company that actively and deliberately misleads people. Despite the various public examples, however, I have hope that such companies are the exceptions. I know of a few international companies from my environment that really take sustainability seriously and have embarked on the journey. However, sustainability and environmental friendliness are complex issues where simple appeals are not enough to initiate a rethink among other market participants. As partners or consumers, we are therefore allowed to be a little patient, despite the urgency of the issue.

Right at the beginning of the article I told you about my balancing act. I am glad that I work in a company that pays attention to its environment and rejects greenwashing in all its facets. Basically, I also have the impression that it is similar for many small and medium-sized companies. But: what to do with the amount of motives that favour greenwashing?

Companies can make a conscious decision not to engage in greenwashing, even if it is not exposed or excused by customers or consumers. They can stick to the truth in all their revenue-generating endeavours. They can advertise with “We don’t do greenwashing”. They can value the environment and their consumers. They can do the right thing. Simply because they want to!

Notes (mostly in German):

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[1] Definition vom Umweltbundesamt
[2] Umschreibung der Augsburger Allgemeine
[3] Definition von goClimate, wortgleich mit der Beschreibung im Camebridge Dictionary
[4] Vorschlag für eine Richtlinie des Europäischen Parlaments und des Rates über die Begründung ausdrücklicher Umweltaussagen und die diesbezügliche Kommunikation
[5] Impact Assessment Report der European Commission in regards of empowering consumers for the green transition through better protection against unfair practices and better information
[6] Greenwashing – Ist das noch faire Werbung?
[7] Beispiele für Greenwashing
[8] Eine Augenweide für Menschen mit Sehbehinderung: die Website des Umweltbundesamts
[9] Website Carbon Calculator: der Carbon-Footprint der Website des Umweltbundesamts
[10] Statista: Green Economy: Selbsteinschätzung deutscher Unternehmen 2021
[11] Dynata: Global Consumer Trends: The Urgent Fight Against Climate Change

Michael Schenkel has published other articles in the t2informatik Blog, including

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