Going green: What is greenwashing and how to avoid it

The demand for businesses to operate sustainably and ethically is higher than ever as people are paying more attention to the environmental impact of consumerism and industrial production, and consumer demand for more sustainable products increases.

As a result, organisations being put on the spot to demonstrate their efforts to improve their businesses sustainability and many are using their sustainability achievements as a marketing tool – but what are the risks?

What is ‘Greenwashing’?

Greenwashing occurs when a company makes untrue or misleading claims about its sustainability and environmental impact for marketing purposes and in reality, it is not actually making any notable sustainability efforts.

What is the risk?

There is an increased scrutiny on businesses to lower their negative impact on the environment and to operate more sustainably, which there is a higher risk of getting caught out for making untrue environmental claims. Getting caught out for greenwashing can damage a businesses reputation and undermine the trust consumers have in the business as a time when the pressure to be sustainable is huge.

Moreover, there has been a surge in regulators taking action of businesses greenwashing and litigation by shareholders and by consumers claiming damages for mis-sold products based on greenwashing.

In the recent months alone we have seen:

• the UK Advertising Standards Authority ban a series of advertisements from a number of large oil and gas companies for including misleading information about their socio-environmental credentials;
• ASOS, Boohoo and Asda come under scrutiny from the UK’s Competition and Markets Authority over green claims made by the three companies;
• Delta Air Lines being sued in the US by customers over its claim to be “the world’s first carbon-neutral airline”; and
• energy giant Drax come under investigation by Ofgem for claiming that its practice of burning wood pellets for energy is sustainable.

How can you avoid greenwashing?

Given the ‘robust’ approach seemingly being taken against businesses accused of greenwashing, it is more important than ever to ensure that any sustainability claims you do make do not put you in the firing line.

A good starting point to mitigate your risk is to consider the six core principles of the CMA’s Green Claims Code when making an environmental claim, which in summary are:

• Make truthful and accurate claims. You must not make environmental claims which could mislead consumers and give them an inaccurate impression of your sustainability efforts. You must only give the impression that your products are as green and sustainable as they really are;
• Be clear and unambiguous. don’t make vague claims that could be misinterpreted. You should communicate clearly and be specific in the claims you make so as not to mislead consumers;
• Give all the information. Consumers should be provided with all the information they need to make informed choices, so don’t purposely omit or hide information that could result in a consumer to be inappropriately influenced;
• If you make comparisons, ensure they are fair and meaningful. Comparisons should be based on clear, up-to-date information and accurate information;
• Consider the full lifecycle of the product or service. Certain factors during the full lifecycle of a product may affect the accuracy of its environmental impact so these should be considered before any claims are made. For example, you may consider the impact of the manufacturing of the product but what about the transportation of the product and the components needed to manufacture it?
• Be substantiated. Any environmental claim must be capable of being tested against scientific or other evidence.

If you would like to speak to someone on this matter, please do not hesitate to contact our Commercial Team.