Starbucks. Volkswagen. Coca-Cola.

These are all companies that say they’re going green. However, their apparent efforts may be no more than a coat of green paint. Underneath the green facade, many companies continue to pollute.    

In countless lawsuits, there have been allegations that companies have misrepresented their environmental impact. For instance, in Earth Island Institute v. BlueTriton Brands, BlueTriton Brands was sued for claiming to be sustainable and trying to reduce plastic pollution while engaging in environmentally harmful acts.

As environmental concerns have come into the mainstream, consumers are relentlessly bombarded with advertisements boasting sustainability.

However, just because a company says something doesn’t mean it is true, especially considering the fact that claiming eco-friendliness can result in more sales, according to a joint study by NielsonIQ and McKinsey. The same study found that 78% of people said a sustainable lifestyle was important to them, incentivizing companies to make claims about sustainability, even if they are exaggerated, to drive sales or improve brand perception.

These exaggerated claims are best described by the word “greenwashing,” a term coined in the 1980s by environmental activist Jay Westerveld. Greenwashing is a form of misinformation used to make something seem more environmentally friendly than it actually is.

“Consumers who are not aware that a company is not green will be influenced to purchase its products believing the company is green,” said John Rowe, the Marketing Communications and Introduction to Business teacher at Carlmont.

Greenwashing is used to increase sales, thus increasing revenue and profit. It doesn’t serve purely to influence consumers.

“Companies greenwash to create the perception that they are green and thus get investments because a lot of capital flows toward companies that are ‘environmentally friendly,’” said Rema Subramanian, co-founder and managing partner of Ankur Capital, a venture capital firm that claims to invest in order to push boundaries and make change.

Little green lies

It is often difficult for consumers to differentiate between a company that greenwashes and a company that is truly environmentally conscious.

“If people haven’t been educated or haven’t had that level of education about what greenwashing is, then they could easily see a greenwashed product and think that it is genuinely a good choice for the planet,” said Iris Yan, a Carlmont student, and environmental activist focused on environmental literacy.

Sometimes, though, people may turn a blind eye to greenwashing as an excuse to continue buying more products with less guilt about damaging the environment. People look for excuses because, despite their guilt, they are often unwilling to make sacrifices. This inability to make sacrifices for the environment often drives the search for products that don’t give much up while also assuaging their guilt with a green facade.

“A lot of consumers knowingly contribute to the problem. They adopt practices that they feel do not compromise on their lifestyle or expectations and are satisfied with just cursory changes,” Subramanian said.

One thing that consumers do not want to lose is their ability to consume. Greenwashing helps balance that desire to buy things with the knowledge that buying things will be worse for the environment by hiding the environmental harms of a product.

“Greenwashing helps fuel mass consumerism and lets people say, ‘I can buy more of this thing because it’s good for the planet,’ when, in fact, they’re still consuming lots of goods produced by polluting companies or those that aren’t actively sustainable,” Yan said.

One time when greenwashing makes a big impact is when it can convince someone to buy something they otherwise wouldn’t have. Greenwashing often convinces people to buy products that, whether sustainable or not, contribute to climate change and pollution.

The issue of greenwashing is cyclical.

“Greenwashing contributes to consumerism, and the consumerism in turn drives greenwashing. We don’t want to lose our comforts, so we do a lot of stuff that we know is not environmentally friendly,” Subramanian said.

Avoidance of the issue is part of what allows the cycle of greenwashing to continue. Consumers supporting companies that greenwash allow the companies to continue greenwashing without suffering consequences.

“On one hand, investment and industry are misleading consumers, but on the other hand, it’s consumers who are not adopting green practices and are happy with surface-level changes that do not do anything. Both are contributing to greenwashing,” Subramanian said.

(Not so) Beyond Petroleum

Both consumer and investor pressure have come together to result in real instances of greenwashing. According to a 2022 report for Google Cloud, a majority of executives report that their organization greenwashes.

In 2021, the European Union did a sweep of marketing and found that 42% of green claims that were made that year were potentially illegal as they constituted greenwashing.

One company accused of greenwashing has been Beyond Petroleum (BP). According to The Guardian, BP spent over $1 million on advertisements in the U.K. that emphasized the company’s green energy investments in 2022, despite spending far more money on fossil fuel investments compared to green investments.

In this situation and other similar ones, companies responded to the incentives in place.    

“If a company is using greenwashing to sell their product, that will definitely increase profit,” said Aubri Thompson, the CEO of Rebrand Skincare, a company that makes skincare products with refillable packaging.

These companies are trying to look green because of the increased conversation on climate, but they seem to be unable to shift their core business to being environmentally friendly.

“BP and other companies have realized public opinion is changing with the growing conversation around the climate crisis. This forces them to greenwash their ads to say they are ‘sustainable,’” Yan said.

Greenwashing is problematic because it, by its nature, misleads people — consumers, investors, and policymakers — with a lack of transparency.

“Companies have a social responsibility. While greenwashing has become rampant today if you haven’t met the standards, then you should be transparent about that,” Yan said.

Accountable or not

Even after a company risks public backlash by ignoring its social responsibility to improve profits, the lack of transparency could still end up hurting its profits in the long run.

“The company may derive some short-term benefits, but in the longer term, when people find out that a company is greenwashing, it hurts their reputation,” said Keith Meyers*, a co-founder of a social enterprise.

However, the hit to its reputation doesn’t always come, even when greenwashing is uncovered.

“Consumers do not penalize companies for greenwashing, and hence, companies are not actually becoming environmentally friendly,” Subramanian said.

Harvard Business Review found in 2022 that when greenwashing from a firm with a bad reputation for quality or innovation was exposed, their ACSI customer satisfaction score dropped by a significant 2.4%. However, they also found that for firms with a good reputation for quality or innovation, customer satisfaction only dropped an insignificant 0.3%.

The reason for this avoidance of penalization and eagerness to turn a blind eye to greenwashing may be due to a lack of understanding surrounding how urgent of a problem climate change is.

“The need for saving the planet has not sunk into everybody’s consciousness to the extent that it should be,” Subramanian said. “Consciousness has to seep into every consumer and every person.”

Solutions

Yan raised the concern that there may also be a lack of understanding surrounding the issue of greenwashing.

“I think people need to know that greenwashing is out there and that it could be geared towards them, and I think if they know about it, then they can find more ways to combat or avoid it,” Yan said.

Instead of putting the responsibility to avoid greenwashing on the consumer, a better solution might be to create laws protecting the consumer.

“There are multiple solutions. One could be more transparency; there could be more checks and balances in terms of what claims are being made. The second is there could be more regulations. In terms of our own company, all the claims we make are generally audited by a third party,” Meyers said.

Specifically, regulations similar to the ones passed in the European Union could be helpful in limiting the use and effectiveness of climate change.

“Legislation like the legislation that has been passed in the European Union limits certain environmental claims that companies can make and requires companies to prove actions that are being taken to claim to be sustainable would be the best way to overcome greenwashing,” Thompson said.

Subramanian had hope for the future through the creation of new innovations. She said Ankur Capital, the firm she co-founded and directs, invests in companies and technologies that can create real change.

“We’re looking at things that can actually create a significant net positive impact versus just being a delta change,” Subramanian said.

One problem people face when looking to be more environmentally friendly is the lack of alternatives, making it difficult to pivot away from environmentally damaging and greenwashed products. There is also a price barrier preventing people from becoming more environmentally friendly consumers.

“Environmentally friendly products are typically more expensive than their alternatives, so that is a hurdle to becoming environmentally friendly,” Rowe said.

But the obstacles don’t end there. The phenomenon of greenwashing can also work to hinder climate action.

“Greenwashing can result in us becoming complacent because we think things that aren’t being taken of, are, resulting in less climate action than is needed,” Thompson said.

Even the growth we currently experience in the United States may be opposed to a sustainable future.

“We have to place some limits on growth in order to be sustainable,” said Amalia Kokkinaki, an environmental science professor at the University of San Francisco.

Looking forward

There are many ways to move forward with greenwashing. Although there are obstacles to addressing the problem, one way progress could be made is through education and policy.

“Education and translating the big messages into policy are really important,” Kokkinaki said.

Another important factor in addressing greenwashing may be the public perception of climate change.

“Once people realize how big of a problem climate change is, we will see positive change happen,” Subramanian said.

Greenwashing could be a catalyst for a shift in public perception of climate and climate advocacy.

“Greenwashing can get people talking about climate change and encourage climate action,” Thompson said.

*This source’s name is changed to protect them from legal harm. For more information on Carlmont Media’s anonymous sourcing, check out Scot Scoop’s Anonymous Sourcing Policy.