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Greenwashing

“Consumers want to make more sustainable choices—and are often willing to pay a premium for it—but are sabotaged by the fact they don’t know what they can trust.”

ARWA MAHDAWI

Wood Lily
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Greenwashing is the practice by which companies claim they are doing more for the environment than they actually are. In recent years, greenwashing has risen for a number of reasons, including increased climate commitments, consumers seeking to buy more sustainable products, and employees feeling attracted to work for companies with strong sustainability credentials.1,2

Greenwashing is a growing concern as companies seek to attract customers by presenting their products as environmentally responsible and are incentivized to do so, following a rise in climate commitments and an increasing consumer demand for more sustainable products. However, according to CMA and EU Commission reports, up to 40% of websites use misleading tactics that potentially break consumer law. Furthermore, 53% of companies provide unfounded claims about their products’ environmental credentials.3,4

“The issue of greenwashing is one that’s been around for a long time, and is unfortunately experiencing a heyday of sorts, but it will be very short-lived. (...) The only caution is that I don't want that much needed reversion to reality to make companies afraid to have ambition, afraid to innovate, afraid to invest. I don’t want it to have a chilling effect on innovation.”

LUCAS JOPPA, MICROSOFT CORPORATION

Common greenwashing tactics include vague claims, unclear language, statements suggesting that products have no negative environmental impact, lack of evidence to support claims, and the use of own-brand eco labels not associated with third-party assurance to international standards.5 The practice causes a number of severe negative consequences, including hindering the decarbonization progress, damaging brand trust, and an increasing lack of compliance with regulatory frameworks. Tackling greenwashing is one of the most important challenges facing climate action, and there is a need for greater transparency and accountability in environmental claims made by companies.2

But how do consumers get swayed so easily? Advertising often involves low-effort mental processing, as consumers engage with it while multitasking — relying on mental shortcuts and focussing on visual cues such as nature images, green colors, labels, or product packaging, which trigger positive emotions and lead to the perception that a product is environmentally friendly. The impact of these cues is so strong that even the absence of green color on a label can cause a product to be perceived as less eco-friendly.7

Examining greenwashing leads us back to some of our usual suspects hindering real climate action. The 2017 Carbon Majors report found that just 100 companies, many of them in the fossil fuel sector, emitted more than 70% of the world’s greenhouse gas emissions since 1988. ExxonMobil, Shell, BP and Chevron were identified as among the highest emitting investor-owned companies since that year.8 In 2022, the Democratic-led Oversight Committee found after a year-long investigation into climate disinformation that Big Oil companies have engaged in a “long-running greenwashing campaign” while raking in “record profits at the expense of American consumers” and avoiding real climate commitments despite portraying themselves as part of the climate solution.9

Many fossil fuel companies have pledged to achieve Net Zero by 2050, but internal documents show that no adequate steps are being taken – with BP and Shell even having scaled back their climate commitments recently.10 Natural gas, which has been termed as a “bridge fuel” is only one of many examples of fossil fuel greenwashing — so powerful, in fact, that it has been classified as a renewable source of energy in the EU taxonomy in 2022.  A BP email exchange in 2017 read that the company should only “minimize GHG emissions where it makes commercial sense”11 – in short, to greenwash, an art the fossil fuel industry has mastered. The goal of this is to maintain what BP calls its “social license to operate”,12 as they are widely accepted by the public, rather than having to adhere to societal norms.13

A 2021 investigation by DeSmog revealed that six major European fossil fuel companies are guilty of greenwashing, with a disproportionate focus on environmental efforts compared to their actual investments in green energy. Two thirds of more than 3,000 social media posts on YouTube, Twitter and Facebook presented a “green” image of the company, despite an average of 80% of the businesses’ operations remaining in oil and gas (and in one case coal). In contrast, only 16% of all online posts and promotions focused on the companies’ fossil fuel activities. Half the companies analyzed dedicated over 80% of their posts to their climate-friendly work such as renewable energy projects, though green investments only made up 12% of those companies’ portfolios.14

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Figure 23: Ad and promotion spending in the clean energy vs. fossil fuel. Source: Christine Arenas.
Figure 23: Ad and promotion spending in the clean energy vs. fossil fuel. Source: Christine Arenas.

There is also a shift in how companies are promoting — or not promoting — their sustainability efforts. Some companies have even started cutting back on their environmental marketing —  a trend which has been dubbed Greenhushing. Research by South Pole found that one in four of the 1,220 global companies with Net Zero targets it surveyed do not plan to publicize their progress as they go. While some companies are still making progress on sustainability quietly, others are worried about being called out for greenwashing or making unfounded claims.15 However, some marketing experts say that failing to market sustainability efforts could result in missed sales opportunities for those companies.16

 

Anna McShane

Anna McShane

GREEN CLAIMS LEAD, THE CARBON TRUST

What is Greenhushing?

Greenhushing is a growing trend stemming from the fear of retaliation if a company puts a foot wrong. The concern is that greenhushing risks reducing transparency and hindering climate ambition. If companies stop talking about what they are doing, it disincentives others to commit to the bold action the world needs. 

Consumer awareness of climate claims is increasing, and a growing number of consumers are well aware of what to look out for when it comes to green claims. Instead of staying quiet, companies should communicate openly to their customers, taking ownership of their failures as well as their successes. By being radically transparent, companies can build trust with their customers and the wider corporate world can learn from the mistakes of others and take action to move together in the right direction.

What’s driving the shift to greenhushing? Many companies’ sustainability achievements focus on “doing less bad” rather than “doing good,” which is difficult to sell. Talking about these activities can lead to criticism, including greenwashing allegations – so companies will need to learn to communicate sustainability issues in a balanced way, acknowledging the complexity of the challenge.17

New and sophisticated types of Greenwashing18

Type of greenwashingDescriptionExample
GreenhushingDeliberately underreporting or hiding green credentials to evade scrutinyMany companies now have Net Zero targets, but choose not to report on their progress — often hiding the fact that they are not taking meaningful steps.
GreenrinsingRegularly changing one’s sustainability targets before they are achievedCoca-Cola is known for missing and moving its recycling targets, as well as packing them with caveats. Between 2020-2022, the company dropped its targets for using recycled packaging from 50% by 2030 to 25%.
GreenlabellingCalling something green or sustainable, or using deceptive wording and symbolsUnilever-owned detergent brand Persil was banned in the UK for its ‘Kinder to the planet’ campaign, as it had failed to substantiate its environmental claims.
GreenshiftingImplying that the consumer is at fault and shifting the blame to themBP’s “Know your carbon footprint” campaign invited customers to share their pledges for reducing emissions, spending millions on advertising about its low-carbon energy while simultaneously investing heavily in new oil and gas.
GreenlightingFeaturing a particularly green aspect of one’s operations or productsZero emissions vehicles made up only 0.2% of Toyota’s total sales in 2021, while the company is pushing a ‘Beyond Zero’ sustainability campaign.
GreencrowdingHiding in a group and moving at the speed of the slowest adopterEight of the top 20 biggest plastic polluters are on the Alliance to End Plastic Waste, but focus on recycling rather than reducing plastic production. Members also include Big Oil companies like ExxonMobil and Shell.

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Greenwashing can also involve misleading advertisements (particularly on social media), claiming or suggesting that climate strategies are aligned with the Paris Agreement, or that they are committed to meaningful solutions.9 In recent years, the UK Advertising Authority banned a number of ads for failing to meet these standards — from Hyundai marketing a car “so beautifully clean, it purifies the air as it goes”,19 BMW helping to “give back to the environment”, or Alpro implying that plant-based foods are universally “good for the planet”.20

Most people do not have sufficient environmental knowledge to assess the sustainability of consumer products, which makes ambiguous or vague claims misleading. For example, the term carbon neutral is often understood by laypeople to mean an absolute reduction in carbon emissions, when in fact it can be achieved through offsetting to “balance” carbon emissions — a practice which has come under scrutiny recently as some major carbon offsetting schemes have been found ineffective.21 When carbon neutral claims are based on the marketer simply offsetting emissions, this can ultimately undermine consumer trust.22

But greenwashing companies and governments are increasingly facing legal scrutiny. According to the Grantham Institute’s most recent Climate Litigation Snapshot, climate change-related legal cases have seen a significant surge globally — more than doubling since 2015 to over 2,000 cases.23 Approximately a quarter of these cases were filed between 2020 and 2022. This trend highlights the increasing use of litigation as a tool to enforce or improve climate commitments made by governments, with 73 ‘framework’ cases challenging overall governmental responses to climate change.23

Over the past year, there has also been a rising trend of legal cases against fossil fuel companies, particularly outside the United States. Such cases are expanding to include the food and agriculture, transport, plastics, and finance sectors. Their purpose is often strategic, intending to instigate broader societal shifts towards sustainable practices. Looking ahead, key areas of interest for climate litigation include cases involving commitments heavily reliant on greenhouse gas removals or ‘negative emissions’ technologies, short-lived climate pollutants, biodiversity, and legal frameworks for the ‘loss and damage’ caused by climate change.24

Johnny White

Johnny White

CLIMATE LAWYER | CLIENTEARTH

The Rise of Climate Litigation

With environmental concerns among consumers rising to fever pitch, it’s unsurprising to see companies boasting green credentials when advertising their brands or products.

A problem arises when these claims are unsubstantiated. In the not so distant past, companies merely purporting to be green – when their products were anything but – could expect few consequences save for consumer backlash. Not so today — with the regulatory and legal landscapes changing rapidly to reveal that, while corporate greenwashing is ever more dangerously widespread, there are now serious risks facing businesses engaging in this damaging practice.

Firstly, greenwashing companies are increasingly finding themselves defending their advertising in the courtroom, with litigation taking aim at disingenuous environmental claims using existing laws that protect both consumers and investors from misinformation. This includes legal action against companies for unsubstantiated statements on environmental responsibility, and unfulfilled commitments to international climate agreements. We’ve also seen claims against companies cherry-picking information when advertising a brand or product’s environmental impact, as well as when advertising misrepresents the impact of unproven technology or other ‘solutions’ – a key example being carbon offsetting.

Some of the companies with the most pervasive green marketing are those with the biggest environmental footprint – such as those in the fossil fuel, automobile, fast fashion, airline, and single use plastic packaging sectors – and therefore have become the subject of legal attention.

In 2019, ClientEarth filed a legal complaint in the UK against BP over the oil giant’s international advertising campaigns, citing the Guidelines of the Organisation for Economic Co-operation and Development (OECD). The complaint set a precedent for alleged greenwashing to be challenged under consumer protection standards, and BP withdrew its advertising.25 A similar OECD greenwashing complaint was filed against the owner of the UK’s largest power station, Drax Energy, over its public claims about its ‘renewable’ biomass business, which burns wood pellets to create power.26

US oil and gas firm Chevron faced a complaint after campaigners alleged the company was greenwashing, infringing the US Federal Trade Commission’s Green Guide standards for allegedly exaggerating its investments in clean energy.23 Also in the US, Washington Gas was the first energy utility to face a greenwashing lawsuit, after it was challenged by ClientEarth and partners over alleged misleading customers on the environmental impacts of methane gas.27

Offsetting claims and Net Zero by 2050 pledges are also a big focus. Back in Europe, oil and gas giant TotalEnergies is facing a French lawsuit over its Net Zero publicity,28 as is KLM in the Netherlands – the world’s first aviation greenwashing lawsuit – over the airline’s ‘Fly Responsibly’ marketing campaign. The case against KLM, brought by Dutch campaigners Fossielvrij, and supported by ClientEarth, led to the company withdrawing the campaign despite maintaining its offsets program. The case continues.29

In Sweden, a court agreed with the country’s consumer watchdog that Arla’s ‘Net Zero milk’ claims were misleading, by giving the false impression it had ‘offset’ the impacts from making and transporting its products – the court banning it from using the term “Net Zero climate footprint”.30 The decision set a precedent under European consumer law, relevant to every EU country. A German court has made a similar ruling against TotalEnergies’ ‘CO2-compensated heating oil’ marketing.27 This year, Australia’s corporate watchdog has filed its first greenwashing lawsuit against Mercer Superannuation over the pension fund’s ‘sustainable’ investments in mining and fossil fuel companies.31

At the core of these cases are the rules in legal and regulatory frameworks worldwide, which seek to prevent firms from misleading customers and investors. These laws are being focused on greenwashing. New regulation is making them more specific and regulators are becoming quicker to take action, because truth in commerce is vital to addressing the climate and environmental crises. If companies want to make sure they’re a part of – rather than an obstacle to – the transition to Net Zero, they must ensure their environmental claims are clear, accurate and complete and are matched by credible action. 

The prevalence of fossil fuel businesses in the cases seen to date is striking. To stamp out the most problematic practices, we need to see lawmakers go a step further and restrict fossil fuel advertising altogether, just like we did with tobacco. There’s no other way to ensure people are protected and supported from advertising which delays climate action. 

It is obvious today that health advertising by tobacco companies would be misleading.  When it comes to environmental crises, the wave of cases and regulatory rulings point to an emerging norm that highly polluting industries – fossil fuel energy and transport, plastic, dairy, and meat – are similarly liable to mislead in sustainability advertising.

Effective regulation could be a solution to tackle the issue of greenwashing. The UK’s Behavioural Insights Team recommends regulating advertising on an institutional level, as well as banning advertising within polluting sectors such as fossil fuels and aviation.32 In fact, these bans are already beginning to be implemented in Europe — with Amsterdam banning aviation and fossil fuel companies (including petrol cars) from advertising in public spaces to reduce greenwashing,30 and France becoming the first country to ban all fossil fuel ads in 2022.31 But policy and regulation is not changing fast enough — we need brands and companies to be part of the effort to tackle greenwashing.

The scale of the problem is reflected in industry data as well: Deloitte data from 2022 shows that two thirds of executives have reported greenwashing as a serious concern in their industries, and that nearly half of the manufacturing industries do not present strategic plans for climate mitigation.33 As much as 30-50% of a brand’s market capitalization comes from its reputation, making it essential to protect their brand trust. 

The absence of a standardized definition for greenwashing causes problems for companies trying to be environmentally responsible, as it leaves them without clear guidelines. Regulations like the French Climate and Resilience Law and the EU’s proposed Unfair Commercial Practices Directive could provide some clarity, but the situation is less optimistic in the US where no such laws exist. Without a consensus on what constitutes greenwashing, businesses and investors alike are left in a limbo of interpretation and uncertainty.34

Combating greenwashing is crucial for both advertisers and regulatory bodies, as it poses a significant obstacle to the shift towards climate-friendly consumption. To tackle greenwashing, various strategies have been developed — such as certification systems, self-regulation, ban on greenwashing advertising practices, and efforts to boost consumer greenwashing literacy.  Certification systems offer quality standards and environmental labels to help consumers authenticate green claims. However, the rise of unofficial green labels and certificates, which often use green advertising cues, has undermined public trust due to their lack of credibility. Advertisers should therefore focus on using green labels supported by official regulations and controls.5 Self-regulatory organizations (SROs) offer more flexibility in responding to urgent changes in the environmental advertising sector, with most SROs organizing regular workshops and many providing training on green claims in advertising as a means of preventing greenwashing.35

Figure 25: Advertising standards enforced by Self-regulatory organizations. Source: EASA.
Figure 25: Advertising standards enforced by Self-regulatory organizations. Source: EASA.

In parallel to these systems, advertising bodies are also taking proactive steps. The European Advertising Standards Alliance (EASA), the leading voice on advertising self-regulation issues in Europe, uses a number of methods to tackle misleading claims. On top of enforcement through complaints, EASA has taken to tackling greenwashing through awareness raising — using digital billboards, paid twitter campaigns and press campaigns to inform and educate the public about misleading claims.2

Figure 26: EASA's awareness raising campaing on greenwashing.
Figure 26: EASA's awareness raising campaing on greenwashing.

It’s crucial for companies to take greenwashing seriously and have a clear strategy in place that is reliably measured and understood across all relevant business units. Fortunately, regulators around the world are taking notice and tightening their guidance and regulations for corporate sustainability claims. The European Commission is preparing an initiative requiring businesses to use standardized methods for quantifying their sustainability efforts, while the US Federal Trade Commission provides guidelines for consumers on how to differentiate greenwashing claims. 

Case Study

How Europe is cracking down on greenwashing

In response to the spread of misleading ‘green’ claims by companies, the European Commission has proposed the ‘Green Claims Directive’, which aims to regulate and substantiate explicit environmental claims made by businesses. A study by the Commission found a majority of green claims either provided vague or misleading information, or lacked sufficient supporting evidence. The directive will establish guidelines to standardize sustainability and green energy labels, helping to provide consumers with clear and trustworthy information. Companies breaching these new laws could face penalties such as a deduction of 4% of their revenue, or exclusion from public procurement processes or subsidies for up to a year. Though not universally praised — with critics asserting that the proposal was significantly weakened by corporate lobbying — it represents a step towards reducing greenwashing. Other countries, like France and the UK, have also implemented laws to regulate ‘green’ claims, reflecting a global trend towards ensuring honest environmental marketing.35

With increasing regulation and societal scrutiny, silence on sustainability practices — as seen in the Greenhushing phenomenon — could be detrimental. Businesses need to find the right balance in their sustainability communications, utilizing strategies like the CRED framework, to ensure they remain authentic and compelling in their messaging, while avoiding the pitfalls of greenwashing and greenhushing. Effective communication of sustainability efforts can inspire other stakeholders and contribute significantly to the creation of a decarbonized, circular, and just economy.13

To ensure that sustainability efforts and claims comply with local laws and regulations, a company’s General Counsel should communicate regularly with the C-Suite to ensure they are backed up with real results and data, and aligned with the overarching corporate strategy.  Additionally, multinationals with a large global footprint can work with service providers that specialize in global sustainability for added assurance. Taking these steps can help companies leave a positive impact both for their long-term reputation as well as wider society.39

Leading creative agency Accenture Song’s advice on avoiding greenwashing emphasizes the importance of honesty, transparency, and concrete action over hollow buzzwords — recommending careful scrutiny of sustainability claims to ensure they’re a genuine part of a brand’s strategy, rather than a distraction. This includes looking into the budget allocation between marketing and sustainability investments. Accenture Song’s concept of ‘greenworking’ promotes a truthful representation of a company’s current position on sustainability, while responsibly setting future goals. Brands are encouraged to showcase their practical actions to avoid constructing a misleading eco-hero persona, and use precise language instead of ambiguous, overused terms like ‘green’ or ‘eco-friendly’.40 By adopting clear, everyday language, businesses can promote sustainability more authentically and remain honest and transparent.

The double challenge of misinformation and greenwashing is a complex issue which has significant consequences for the future of our planet and its people. While a vast majority of the scientific community agrees on the climate crisis being caused by humans, misinformation continues to seep into public discourse. Key players like Meta and Google have taken steps to curb the spread of misinformation, but major players like the fossil fuel industry continue to create misleading advertising campaigns which slow down progress on climate action.

While the demand for sustainable products is on the rise, so too is greenwashing — which jeopardizes public trust and sabotages genuine progress. Regulatory landscapes are shifting in response — with countries like Amsterdam and France leading the charge against environmentally misleading ads — but the lack of a standardized definition for greenwashing continues to lead to confusion and potential for loopholes.

Gradually, solutions such as certification systems, greenwashing literacy education, and strengthened regulatory guidelines are starting to emerge as potential solutions — but what is really needed is a transformation driven by business and marketing. Companies planning to reach new customers — and keep existing ones — should prioritize honesty, clarity, genuine action, and commitment to sustainability over short-sighted marketing strategies. In a world on the brink of climate tipping points, integrity in communication and action is not just advisable, but imperative.

Next Up

The Current State of Climate Communications

Communication has the power to be a driver of action or inaction, of hope or despair, of literacy or misinformation. When it comes to the climate crisis, we often walk a fine line between these extremes. But the strategies we use to communicate about climate, and the platform through which our messages are disseminated, are factors too important to ignore. They shape our collective response to the biggest threat facing humanity, and they urgently need overhauling.

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Contributors in this Section

Anna McShane

Anna McShane

THE CARBON TRUST

Johnny White

Chris Filardi

CLIENTEARTH

See All the Whitepaper Contributors

Notes

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    34. Frost R. France becomes the first European country to ban fossil fuel adverts. euronews. Published August 24, 2022. Accessed May 23, 2023. https://www.euronews.com/green/2022/08/24/france-becomes-first-european-country-to-ban-fossil-fuel-ads-but-does-the-new-law-go-far-e
    35. Deloitte. 2022 Climate Check: Business’ Views on Climate Action Ahead of COP27. Deloitte Touche Tohmatsu Limited; 2022. https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Risk/gx-risk-deloitte-climate-pulse-report-2022.pdf
    36. Makower J. Why we can’t stop talking about greenwashing. Greenbiz. Published January 17, 2023. Accessed August 2, 2023. https://www.greenbiz.com/article/why-we-cant-stop-talking-about-greenwashing
    37. Deloitte Perspectives. The greenwashing risk to corporate sustainability. Deloitte. Published 2023. Accessed May 23, 2023. https://www.deloitte.com/global/en/services/legal/blogs/greenwashing-risk-to-corporate-sustainability.html
    38. Mahdawi A. Beware advertisers, the EU has a new plan to limit hot air around environmental claims. World Federation of Advertisers. Published April 12, 2023. Accessed May 24, 2023. https://wfanet.org/knowledge/item/2023/04/12/Beware-advertisers-the-EU-has-a-new-plan-to-limit-hot-air-around-environmental-claims 
    39. Accenture Song. A Primer on Sustainable Communications. Published online 2022
Common labels used to indicate environmentally friendliness
Have you seen any of these labels before? These are not certified by any third-party assurance to international standards.
Figure 24: Energy companies which presented a "green" image. Source: DeSmog.
Figure 24: Energy companies which presented a "green" image. Source: DeSmog.
Shades of Greenwashing
Source: Christine Arenas
Figure 27: Strategies for the Green Economy. Source: Joel Makower, 2008.
Figure 27: Strategies for the Green Economy. Source: Joel Makower, 2008.

Greenwashing: When Companies Aren’t as Sustainable as They Claim (Source: WSJ)

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