Unmasking Greenwashing: How to De-Risk Your Brand

This is the second article in a 4-part series on transparent, accurate environmental claims. All articles in the series include:

Part 2 - Unmasking Greenwashing: How to De-Risk Your Brand

In 2016, Keurig launched a recyclable K-Cup pod. Customers were thrilled. Those disposable pods, often the boon of environmentally conscious consumers who love a single cup of coffee, could now be dropped into the recycling bin. An asterisk in small print noted: “Check locally, not recycled in all communities.”

What is your impression when viewing this ad? My assumption is that the pods are recyclable in most communities, including mine (an urban area with a large recycling facility).

In 2018, a plaintiff filed a lawsuit claiming that Keurig’s claims were misleading and that the pods could not be recycled in most communities because they were too small, often contaminated, and not made of a material that was frequently resold (#5).

Keurig countered that it was compliant with the Federal Trade Commission (FTC) environmental claims guidelines because they included a disclaimer noting the pods were not recyclable everywhere. Additionally, Keurig said it had tested the pods with large recycling companies to confirm recyclability.

When judges did not dismiss the case, Keurig settled for $10 million without admitting any wrongdoing.

This Keurig example is an oft-cited one of greenwashing and one that demonstrates the complexity of this issue for businesses.

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What is Greenwashing?

At its core, greenwashing is an accusation of deception. In many cases, accusers claim a company is intentionally using deceptive marketing tactics to create a false sustainability image.

I find this definition of greenwashing overly accusatory and assuming of malintent, so I propose an alternate business-friendly definition:

“Communications that mislead an audience by creating the perception of a better environmental profile than reality.”

Note in both definitions, it’s the “communications” that mislead, whether or not intentional. Call me naive, but I suspect that Keurig business leaders did not sit around a table and brainstorm, “How can we get our customers to think that our pods are recyclable when we know they are not?” Rather, I imagine they knew they had a business and environmental challenge likely believed their solution worked and met the FTC’s environmental claims requirements.

However, I wonder if the Keurig team would have changed its communications had it asked these questions to consumers prior to launch: “What is your impression of the environmental benefit of ad? Do you think you’d be able to recycle these K-Cups in your community? Would you check to see if they are recyclable before you recycle them?”

To identify greenwashing, we must ask ourselves two critical questions:

1) What is the audience perception?

2) Does that perception accurately reflect the product’s environmental attributes?

Whether or not one is in technical compliance with regulations, companies are still at risk of greenwashing if its messaging is perceived as misleading.

Why Does Greenwashing Matter?

It’s illegal to make false environmental claims, and one could be sued, fined, or required to change messaging. Additionally, promoting a product as more environmentally friendly than it is can erode trust and hinder true environmental progress.

As I mentioned in the first article in my series on environmental claims, consumers are increasingly distrustful of environmental claims from products and companies. Only 38% of consumers believe companies when they make these claims, down from 47% just a year earlier. Trust, the backbone of a customer relationship, doesn’t apply to one realm. If consumers distrust your environmental promises, they may discount all messaging. Some companies, like H&M, have recently won legal battles against misleading environmental claims, but the barrage of negative press can damage brand reputation.

True environmental progress requires change. We must be wary of reputational benefits that are purely marketing spin versus those that result from action. Customers seek an actual environmental benefit by purchasing products with environmental attributes. When a company can generate sales without making more extensive improvements, there is less incentive to advance a sustainability agenda. Moreover, misleading messaging can make it difficult for customers to differentiate between businesses that are aggressively reducing their environmental footprint and those that are seeking purely reputational benefits.

Forms of Greenwashing

While the most egregious type of greenwashing is explicitly false or inaccurate claims, there are additional forms that can be perceived as misleading. Here are four common practices, which apply not only to product claims but also to overall brand and campaign messaging, that often arouse accusations of greenwashing. Understanding these practices and how they influence audience perception will help you better detect your greenwashing risk.

Vague and Unsubstantiated Claims

General statements about a product’s environmental profile being good or better for the environment are misleading when they are absolute, not explained, or unsupported by data. Attributes such as biodegradability, composability, and recyclability, even though they seem specific, often need to be qualified to explain when they apply, such as in the Keurig example.

Examples:

Sustainable
Eco-friendly
Biodegradable
Better for the environment

Hiding Negative Impacts

Also called hidden tradeoffs, this type of sustainability messaging disproportionately promotes a smaller, more “environmentally friendly” part of a business, which creates the perception that all aspects of the business are “better for the environment.” The messaging overshadows, or hides, the business’s larger negative footprint. All businesses have a negative environmental footprint to some degree, so it’s important to help the audience understand the relative ratio of impact with respect to the entire business.

Let’s use an example: Imagine that a company promotes a product as being environmentally friendly by focusing on how it’s packaging is now plastic-free. However, 95% of the plastic used is in the product itself—only 5% is in the packaging. It could be misleading to excessively promote a 100% reduction in plastic packaging, when packaging represents only a small portion of total plastic.

A company is particularly vulnerable to hiding negative tradeoffs when its broader industry or business model is widely regarded as detrimental to the environment. Examples include the fashion, oil, and gas industries. In the case of fashion, low cost, high-churn fashion brands draw criticism for disproportionately promoting “sustainable fashion” lines, when operating within an environmentally harmful fast-fashion model. Similarly with oil and gas, companies face backlash when they advertise their renewable energy investments, despite a significant portion—often well over 95%—of their investment and revenue comes from expanding fossil fuel usage. This set of BP advertisements was highly criticized for representing 4% of BP’s energy investments.

Implied Green-ness

This occurs when a brand heavily relies on the color “green” and nature-themed imagery to project a holistic, environmentally friendly image. While the use of green is not inherently problematic, it can potentially exaggerate the perception of environmental commitment that surpasses the brand’s actual practices. Consequently, it becomes crucial to evaluate the impact that imagery and color palette have on the audience to assess whether the overall impression accurately reflects the brand’s environmental initiatives.

Shifting Blame

Messaging that encourages consumer behavior change risks being perceived as trying to leverage an environmentally friendly image without substantial action. Shell, for example, faced criticism for encouraging consumers to reduce their own emissions. A tweet asking, “What are you doing to reduce your own environmental footprint?” resulted in severe backlash and mockery on social media, highlighting Shell’s significant contribution to climate change.

Focusing on consumer behavior in messaging is warranted when a brand creates a new product or service that requires a change in consumer behavior to achieve environmental improvement. An example is Tide Coldwater, a series of products that encourage consumers to wash their clothes in cold water versus hot water. Tide reformulated these products to work effectively in cold water, but the environmental benefit can only be realized if consumers reduce their washing temperature.

How to Avoid Greenwashing and What To Do Instead

To reduce the likelihood of misleading your audience you need to be conscious of the above common practices. A foundational guide to help you is the FTC’s Green Guides, which outline principles for making environmental claims—we’ll dive into these guidelines later on in this series. To avoid greenwashing, you must focus on how your messaging impacts the audience impression with consideration to context, industry familiarity, and the communication itself. There are no set rules for what to do, but the following principles will provide you with a framework to move forward in confidence.

Understand Your footprint

Larger corporations often have a comprehensive understanding of their environmental footprint thanks to teams of people who evaluate supply chain, materials, and manufacturing impacts. For smaller and medium-sized companies, this can be more challenging. Regardless of a company's size, it is crucial to develop an understanding of the material environmental impacts associated with the business. This entails identifying the most significant environmental impacts concerning energy/carbon, water, and waste across the entire lifecycle—from sourcing to consumer use. Gaining insight into the overall footprint provides valuable context for prioritizing environmental improvements and assessing their significance.

We’ll dive deeper into this topic in next month’s article on Lifecycle Thinking!

Validate with Data

Ensure you have validated data and, when possible, third-party certifications to support your messaging. Consumers and stakeholders often do not believe when a company makes its own environmental claims. Support from third parties can significantly increase credibility. Before leveraging claims about your supply chain, using phrases such as “sustainably sourced” or “made with recyclable materials,” gather data and third -party certifications from your suppliers. Company-developed seals and icons are coming under increasing scrutiny and will likely not be permitted in the next round of FTC claims guidance.

Communicate Proportionally

The focus on environmental benefits should be proportional to the magnitude of improvement. Specify what aspect of the product is improved and by how much, without conveying through visuals and broad claims that the entire product is “sustainable.” I love this example of Coca Cola Life, which initially launched with an all-green label and faced backlash of being perceived as a “natural” product when the primary sweetener was sugar. An updated version of the packaging calls out the specific sweeteners, and green covers only a fraction of the package versus the entire label.

Practice transparency

Be honest and open about your company’s journey, progress, and areas of improvement. Remember: Every company has a negative environmental footprint, and some are working harder than others to reduce that footprint. Business leaders who embrace the challenges they face and communicate transparently about their progress and their shortcomings build more trust among their customer base.

Look at the example below from Patagonia’s website: As of 2021, only 33% of Patagonia’s factories are paying a living wage. My first reaction was not, “Wow, Patagonia is horrible for not paying a living wage to most workers.” Instead, I thought, “If they are willing to admit this, I wonder how much worse it is for other brands who are less transparent?” Counterintuitively, my perception is improved by an admission of imperfection. Additionally, the low statistics in one domain are then balanced by achieving closer to 100% in other focus areas.

Educate your Communicators

Sustainability is a broad and complex topic. Communicators need to become educated about the technical details and the legal requirements, so training is essential. I recently worked with a global media to educate its sales team on what greenwashing is and shared principles on transparent, accurate environmental claims. Read the case study here.

Evaluate Your Perception

Because greenwashing is an allegation of misleading your audience, it’s important to understand whether communications are indeed misleading. The simple way to do this is to ask your audience, whether a consumer, client, investor, or non-profit. If their perception does not line up with your actual footprint, then the message is misleading. Certainly, there may be subjective differences in opinion, but knowing the perception in advance helps you evaluate risk and determine your course of action. Some companies, such as Unilever and Vodaphone have established panels of internal and external sustainability experts to review environmental marketing claims.

As we’ve mentioned earlier, one unfortunate outcome of increasing greenwashing accusations is that companies that are making meaningful progress in sustainability are, at times, afraid to communicate on the topic for fear of getting called out as hypocritical or deceptive. However, customers want to know what brands are doing to improve environmental footprints, and brands that are communicating environmental attributes are outperforming conventional products, as we explored in the first article in this series.

Communication is the only way to share progress. When done with intention, transparency, and an understanding of perception, environmental communications can increase trust, revenue, and accelerate innovation that addresses the world’s most challenging environmental issues.

Stay tuned for the next article on in this series: “Embrace Lifecycle Thinking”!