Greenwashing, a term increasingly prevalent in corporate sustainability discussions, refers to companies falsely marketing their products or policies as environmentally friendly. This phenomenon, often criticized, can be viewed as an inevitable phase in the evolving landscape of corporate responsibility. However, some industry pioneers are setting commendable standards for genuine sustainability, guiding others away from superficial claims toward meaningful action.
This practice of greenwashing also happens due to taking advantage of diverse reporting systems, a lack of unified taxonomy, and varying legal consequences. These challenges are set to change with the implementation of the Corporate Sustainability Reporting Directive (CSRD), coming into effect in July 2024, and the introduction of the European Sustainable Reporting Standards (ESRS). These directives will require a wide range of topics to be covered, including a coherent and consistent taxonomy for brands, thereby reducing the prevalence of greenwashing. Greenwashing may also result from still-growing competencies, a lack of knowledge, and the use of common solutions treated as visual archetypes. The awareness of responsibility behind the visual aspects of brands has grown in recent years. Eventually, any greenwashing will become detectable and harmful to the brand.
Greenwashing vs Social washing
The past year saw several companies involved in greenwashing scandals, like DWS Group and H&M. These incidents demonstrate the growing scope and complexity of greenwashing activities, from direct consumer deception to ambiguous pledges and certifications. Regulators, investors, and civil society are grappling with this evolving problem, with new initiatives emerging to bring transparency to corporate behavior and combat greenwashing. Social washing, where companies mask underlying social issues to maintain a positive reputation, is another concern. This practice is often more severe than environmental claims, indicating the critical nature of these issues. In both greenwashing and social washing, authenticity, transparency, third-party certifications, consistency, and collaboration with industry groups are key strategies to combat these practices.
Companies employ many of the same tactics in social washing as with greenwashing, such as selective disclosure or symbolic management. The intent is the same: to achieve a competitive edge by projecting an image of sustainability. Often the same companies are involved, looking to capitalize on this perception. When looking at cases in which incidents are linked to solely greenwashing and social washing respectively, 18% of companies linked to greenwashing in the period from September 2018 – September 2023 was also linked to social washing, increasing to 31% when only publicly listed companies are considered.
The practice of social washing escalates at a slower rate than greenwashing. The number of strictly social washing risk incidents, those without an environmental component, increased 15% over the past year (September 2022 – September 2023) from the year prior, in comparison to 35% observed for instances of strictly greenwashing.
In the B2B realm, greenwashing becomes more complex. Misleading corporate sustainability reports and overstated environmental benefits in supply chains are common examples. The practice escalates further in various sectors, with issues like human rights abuses, privacy violations, and supply chain problems being prevalent.
How to spot greenwashing tactics in branding and marketing
As the corporate world prepares for these changes, branding and design agencies play a critical role in shaping a more sustainable and responsible business environment. Therefore, it is crucial to face the greenwashing practices in design and branding beforehand. Often that type of design involves the use of certain visual elements, language, and messaging strategies that give the impression of environmental friendliness or sustainability, without a substantive commitment or action behind these claims. Here are some typical examples of greenwashing in these areas:
- Misleading Visual Elements
• Use of Nature-Inspired Imagery: Brands might use images of nature, like trees, leaves, or water, to create an impression of eco-friendliness, even when their products or practices are not environmentally sustainable.
• Color Green: Overuse of the color green in packaging or branding to subconsciously suggest that a product is ‘natural’ or ‘eco-friendly’.
• Eco-Themed Product Design: Products might be designed to look rustic, minimal, or ‘earthy’ to imply sustainability, even if they are not produced in an environmentally responsible manner. - Vague or Misleading Language
• Buzzwords Without Substantiation: Terms like ‘green’, ‘eco-friendly’, ‘natural’, or ‘sustainable’ are often used without clear, verifiable information to back up these claims.
• Hidden Trade-Offs: Claiming a product is sustainable based on a single attribute while ignoring other important environmental issues. For example, saying a product is ‘made with recycled materials’ but not disclosing that it’s not recyclable itself.
• Irrelevant Claims: Making an environmental claim that may be truthful but is unimportant or unhelpful for consumers seeking environmentally preferable products. For instance, a product labeled as ‘CFC-free’ when CFCs are already banned by law. - Overstating Environmental Efforts
• Exaggerated Claims: Brands may exaggerate the environmental benefits of their products or policies. For example, a company might promote minor energy-saving measures as major sustainability initiatives.
• Misleading Endorsements or Certifications: Using fake labels or creating their own ‘certification’ logos to imply that a product is endorsed or certified by a reputable environmental organization. - Lack of Transparency and Accountability
• Selective Disclosure: Companies might disclose only positive environmental news while hiding or minimizing their negative impacts.
• Green PR Over Green Action: Focusing more on public relations campaigns about sustainability rather than implementing substantial environmental practices. - Sustainability as an Afterthought
• Limited Edition ‘Green’ Products: Offering a small range of ‘eco-friendly’ products to overshadow the non-sustainable nature of the main product line.
• Post-Consumer Responsibility: Pushing the responsibility of environmental sustainability onto consumers, like urging them to recycle, without making the product itself more sustainable.
As it can be noted – greenwashing can happen on the border of branding and communication. Here, proposed earlier this year, the EU Green Claims Directive would require companies to substantiate broad environmental claims like “carbon neutral” or “made from recycled materials.” The directive would target vague language, unclear comparative claims, or the use of broad environmental terms that cannot be approved by a certification, with infringement leading to potential legal consequences and financial penalties of up to 4% of turnover. In the US, pressure is increasing to update the Federal Trade Commission’s Green Guides, which aims to help companies avoid misleading environmental claims.
New directives aim to standardize reporting across various domains, ensuring comparability, scalability, and reliability of sustainability information. Companies will now need to provide both financial and non-financial reports, whether in the form of board reporting, sustainability reports, or integrated reports. This is, again, where branding and design agencies can play a pivotal role in supporting their clients. These agencies can help present data in ways that meet the needs of report recipients, ensuring clarity and consistency in communicating sustainable practices and achievements.
Moreover, although branding and design agencies might not be directly required to undergo an ESG reporting process, they have a unique opportunity to support their clients who are obligated to report. For example, agencies can measure the carbon footprint of their projects, thereby contributing to a more comprehensive sustainability narrative for their clients.
Strategies against greenwashing
As a starting point, here are strategies to look for, when committing to not-greenwashed branding and communication, including b2b sector:
Authenticity in Business Practices
In the B2B sector, authenticity extends to every aspect of business operations. Companies must ensure that their sustainability claims are not only accurate but also reflected in their internal processes and business relationships.
Example: IBM has been recognized for its commitment to environmental sustainability, integrating it into their business model and operations. They focus on energy efficiency, waste reduction, and responsible sourcing, ensuring that their sustainability claims are deeply rooted in their business practices.
Transparency in Supply Chain Management
Transparency is crucial, especially in supply chains. B2B companies need to ensure that their suppliers also adhere to sustainability standards to prevent greenwashing.
Example: Cisco Systems emphasizes transparency in its supply chain. The company has developed stringent supplier standards and conducts regular audits to ensure compliance with environmental and ethical practices, thus maintaining integrity throughout its supply chain.
Third-Party Certifications and Standards
Obtaining third-party certifications is a powerful way for B2B companies to validate their sustainability claims and avoid greenwashing.
Example: Schneider Electric, known for its energy management solutions, has received numerous certifications, including ISO 14001 for environmental management systems, which validates their commitment to sustainability and helps build trust with business clients.
Consistent Sustainability Reporting
Regular and detailed sustainability reporting is essential for B2B companies to transparently communicate their environmental impact and initiatives.
Example: SAP, a leader in enterprise software, publishes extensive annual sustainability reports. These reports detail their environmental performance, goals, and the progress of their initiatives, ensuring that stakeholders are well-informed about their genuine sustainability efforts.
Collaboration and Industry Standards
Collaboration with industry groups and adherence to established sustainability standards can help B2B companies align with best practices and avoid greenwashing.
Example: Siemens AG is involved in multiple industry collaborations and initiatives focused on sustainability. By aligning with these groups, Siemens ensures its practices meet or exceed industry standards, reinforcing the authenticity of its environmental claims.
Innovation and Sustainable Solutions
Investing in innovative solutions that address environmental challenges can demonstrate a B2B company’s commitment to genuine sustainability.
Example: General Electric, through its GE Renewable Energy division, invests heavily in developing sustainable energy technologies. This not only underscores GE’s commitment to combating climate change but also positions the company as a leader in sustainable innovation in the B2B sector.
Conclusion
The impact of these regulatory changes extends beyond mere compliance. They signify a shift towards a more accountable and transparent corporate world where sustainability is not just a buzzword but a measurable and integral part of business operations. By mandating a coherent framework for sustainability reporting, the CSRD and ESRS will effectively reduce the prevalence of greenwashing. Companies will no longer be able to hide behind vague claims or disjointed reporting standards. Instead, they will be held to a higher standard of accountability, ensuring that their sustainability efforts are both genuine and effective.
In this evolving landscape, the role of branding and design becomes increasingly crucial. As an agency deeply rooted in the conscious branding concept we can guide our clients through this complex terrain, ensuring that their sustainability narratives are not only compliant with the new standards but also resonate with their stakeholders. By doing so, we not only enhance the credibility of our clients but also contribute to the broader goal of genuine corporate sustainability.
In summary, the forthcoming CSRD and ESRS represent a significant leap forward in the fight against greenwashing. They will enforce a level of rigor and transparency in sustainability reporting that has been lacking, compelling companies to align their practices with their sustainability claims. As the corporate world prepares for these changes, the interplay between compliance, branding, and design will become a key factor in shaping a more sustainable and responsible business environment. Here is where we come to play with our expertise in designing sustainability reports and conscious branding frameworks. If you would like to shift your brand into a more sustainable future make sure to get in touch with us.