Tuesday, August 03, 2021

What is Greenwashing, and How Can it Affect Brand Image?

Poornima R Apte
May 13, 2021

3 minute read

April Jordan is a “forensic researcher.” April, a marketing professional and owner of The Ethical Edit Communications, meticulously investigates brands’ sustainability claims. She is committed to buying sustainably sourced and manufactured products when she can.

In an interview for this article, Neil Saunders, the managing director of GlobalData‘s retail division, says that people like April are part of a growing number of consumers who are closely scrutinizing brands’ green claims and calling out “greenwashing” when they see it.

What is greenwashing?

“Greenwashing” happens when companies use false or misleading advertising to make themselves seem more environmentally friendly than they really are or to cover up environmentally destructive practices.

In an interview for this article, April says, “A good example is household cleaner names that contain words like ‘green’ or ‘natural,’ but when you check the ingredients, they’re incredibly toxic and not the type of thing that consumers associate with the term ‘green’ or ‘natural.'”

April continues, “Greenwashing can be difficult to spot because, on the surface, the greenwashed products or messages can say all the right things and use all the right imagery. However, understanding the true nature of a company or product often takes quite a bit of research and requires a technical or in-depth understanding of various topics.”

But that doesn’t deter consumers like April who are quick to sniff out greenwashing and hold companies’ feet to the fire.

Greenwashing’s impact on the bottom line

Businesses might attempt greenwashing because there’s a direct correlation between sustainability and sales. According to a report from NYU Stern Center for Sustainable Business, over a five-year period, products marketed as sustainable grew 5.6 times faster than those that were not. The temptation to greenwash is acute given there’s money to be made by being perceived as green.

Such dishonesty about business practices is a turnoff for consumers like April and can seriously damage brand reputation. Part of the challenge for both companies and consumers is that sustainability itself runs along a broad spectrum.

“It’s important to take a holistic view,” Neil Saunders says. “It’s no good using green packaging and then polluting the environment in other ways. Brands have to align the whole business to sustainability principles,” he says.

“Being honest is very important,” Neil adds. “Consumers understand and accept that brands don’t get everything right all the time. And they also understand that the move to being sustainable is a process— it doesn’t automatically happen overnight.” Corporate social responsibility (CSR) reports, which are typically annual updates on sustainability initiatives, are great tools through which companies can honestly communicate their progress, Neil says.

While greenwashing can damage a brand’s reputation, its direct impact on sales is less clear. In the long term, expect the number of savvy consumers to grow. Equally important, these consumers vote with their wallets. A majority of millennials and Gen Zers are willing to pay more for sustainable products.

The trend lines are here to stay. “We definitely see a shift toward sustainability, which means it’s a lucrative area for [business] growth, and brands who aren’t already there will see it as a worthwhile initiative to pursue,” Neil says.

These market shifts will likely push companies to seriously reevaluate their portfolios and engage in authentic discussions about their sustainability initiatives.

And when they do, consumers like April will be paying close attention.

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Poornima Apte
Poornima Apte is an engineer turned award-winning writer who loves literary fiction and collecting clouds. Her proudest cloud acquisition so far has been the Kelvin Helmholtz formation she spotted on a routine Target run. Follow her on Twitter @booksnfreshair.
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