Greenwashing: What is it and what actions can companies take to avoid it?

This is an automated translation of the original release published in Spanish.

PRESS RELEASE from SLR

July 2024

The commitment of companies to sustainability is nothing new. For several years now, many of them have been inclined to generate environmentally responsible products and services, which has been accompanied by campaigns and statements in their favor. However, several of them have been accused of greenwashing .

Greenwashing is the way in which companies create a false, contradictory and ambiguous image about their ecological responsibility. It is a deceptive practice, where firms appear to have a solid environmental commitment, while they continue to operate in an unsustainable manner. The purpose is to encourage people to buy their products, since they are supposedly helping in the transition towards a more sustainable world.

The European Union issued a report in January of this year with more than 300 business sustainability statements. In more than half of the cases, insufficient information was provided for consumers to assess whether companies' claims about the sustainability of their activities and products were accurate.

Public and regulatory investigation has revealed these actions, which has forced companies to be more responsible in the face of this problem. Ana Amar, director of ESG Advisory for Latin America at SLR, a global sustainability consultancy, comments that “consumers are more informed and demanding than ever, driving companies to adopt more transparent practices and measure the performance of their environmental commitments, so as not to face negative consequences in terms of reputation and sales.”

Some clear examples of greenwashing are when companies put special emphasis on the fact that they have managed to reach their sustainable goals in certain products, diverting attention from the fact that the company continues with activities that harm the environment, which is known as greenlighting. Another example would be greenshifting, which is when the client is incentivized to pay more to compensate for any type of environmental impact, shifting the blame to whoever chooses to purchase these services, separating themselves from the damage caused.

For Amar, it is necessary to follow certain guidelines to continue with the transition and maintain consumer trust. “One of them is to review every claim your company makes about the green products or services it offers. If the veracity that what is offered is truly sustainable is inspected, more trust will be generated with consumers.” In order to achieve that, it is important to work internally with the Communications and Marketing, Sales and Product Development teams, thus ensuring you have the right processes and governance.

Also, choosing to achieve third-party certifications serves as a credential that differentiates you from the competition, by demonstrating a genuine commitment to the environment, contributing to the development of a more sustainable economy, while aligning with regulatory and market trends.

Ultimately, companies following a more transparent course of action protects their corporate image and drives real change towards a more sustainable and responsible society. “The great challenge is for companies and government entities to work together to incorporate comprehensive practices that promote environmental care and protection,” concludes Amar.

Greenwashing glossary and other terms

Greenwashing is also used as a general term to refer to other types of unsubstantiated sustainability claims. This glossary serves as an aid to differentiate the different types of this practice:

Greenwashing	When a company makes false or ambiguous claims about its environmental credentials to generate interest in its products or services.
Greenshifting	When a company shifts the blame to consumers by offering them the opportunity to pay extra to “offset” any environmental damage caused by the product or service.
Greenrising	When a company regularly changes its ESG goals before they are achieved. This means that the company avoids any type of responsibility for the progress made and never really achieves the objectives set in the first instance.
Greencrowding	When a company hides in a group, usually of peers or a broader industry, and moves at the slowest possible speed of sustainable policy adaptation. This is similar to a “race to the bottom” and allows companies to avoid committing to ambitious goals.
Greenlighting	When a company focuses on “green actions” on a certain operation or product. This tactic is designed to divert attention from environmentally damaging activities being carried out elsewhere.
Greenlabelling	When a company markets a product as eco-friendly or sustainable, but closer examination reveals that it is misleading. This can also take the form of companies using green colors and natural imagery such as forests and plants to suggest that a product is “greener” than it is.
Greenhushing	When a company chooses not to disclose or omit its green or ESG credentials from the public for fear of being accused of greenwashing. Although this is not a problem of making false statements, it can favor ecological massification and pose a risk to the reputation of companies if it is not observed that they are not doing enough work related to the environment.

Other types of “sustainable cleaning”

While greenwashing refers to environmental “washing,” there are other types of this practice that have been defined for specific problems that arise from broader sustainability goals.

Rainbow/pinkwashing	When a company makes claims to support the LGBTQ+ community without taking actions that actually prove it.
Social washing	When a company that is a signatory to the United Nations Global Compact or that uses the UN Sustainable Development Goals to indicate that it is working to be sustainable, but without actively engaging in or reporting progress on any such activity.
Purplewashing	When a company uses discourses of equality, but they are actually involved in activities that disadvantage women. This can take the form of advertising hygiene items celebrating female empowerment, while the products still have a “pink tax” (a higher price than products aimed at men).

 

SLR-Corporate Citizenship

Since 1994, SLR has worked with its clients to make sustainability a reality, thanks to its deep technical implementation capabilities. The firm is based in the United Kingdom, and today has operations in Europe, Latin America, Africa, the United States, Asia Pacific and Canada. It has a team of more than 3,000 advisors, capable of addressing the most complex and varied sustainability challenges.

Corporate Citizenship is a global strategic consulting firm, specialized in sustainable and responsible businesses that create long-term value for all its stakeholders. It was created in London in 1997, and since 2014 it has an office in Chile, from where it accompanies large companies in Chile and Latam on their path towards sustainability.

In 2021, Corporate Citizenship was acquired by SLR. In this way, the merger of both firms has allowed us to form a global leader in sustainability solutions, which provides its clients with a unique combination of strategic advice and on-the-ground technical support.