The demand for more ‘eco-friendly’ products and services is booming. According to a survey by WWF, online searches for ‘sustainable’ goods increased by 71 per cent since 2016. This has translated into growing pressure throughout supply chains for organisations to demonstrate ‘green’ credentials. Many companies are now actively reporting their ‘environmental impact’ and committing to long-term goals like ‘carbon neutrality’.

Notice all the terms in apostrophes. Today’s environmental agenda is filled with buzzwords, many of which have no universally agreed definition. In fact, all of the terms highlighted above can be used in varying, and sometimes misleading, ways.

Greenwashing

Misleading customers or stakeholders into believing a company, product or service is doing more for the environment than it is, is called greenwashing.

Unfortunately, greenwash is not uncommon. Sometimes it’s rather obvious, like a fossil fuel company advertising that it is leading the way to cleaner energy, when in reality these activities only make up a tiny proportion of its business. Sometimes it’s less obvious and may occur despite good intentions. For example, a business that chooses to purchase carbon offsets and promote itself as ‘carbon neutral’, without making any change to its own operations, could easily be accused of greenwashing.

Key greenwashing terms worth knowing

Research shows that an alarming 40 per cent of ‘green’ claims being made by businesses online could be considered misleading, often due to:

• Vague and unclear terms such as ‘eco’ or ‘sustainable’ without adequate explanation or evidence.
• Own brand ‘eco’ logos and labels not associated with any recognised body or certification.
• Hiding or omitting certain information to make products or services appear more environmentally friendly than they are.

The effect is increased scepticism amongst consumers. A recent YouGov poll found that two thirds of people are now wary of environmental and social claims made by brands.

Separate research found that around 60 per cent of institutional investors believe greenwashing is blocking them from delivering on their sustainable investment goals, while the vast majority of individual investors say they find it hard to trust business’ claims at face value.

There is even doubt around corporate net zero emissions goals, some of which offer little accountability or any genuine action on the ground.

Understanding the new Green Claims Code

How to steer clear of trouble

This cynicism is good news in the fight against greenwashing, but it also poses a risk for companies who are trying to do the right thing. Even if you are taking genuine action to improve the impact of your products, services and/or operations, you could get caught up in accusations of greenwashing if you communicate your action poorly.

To ensure businesses don’t fall foul of a stakeholder backlash – or break the law – the UK’s Competition and Markets Authority (CMA) has launched the Green Claims Code, with businesses failing to comply facing legal action from consumers or trading standards bodies.