FSC / Jesús Antonio Moo Yam

What is greenwashing? Exposing deceptive tactics

Greenwashing creates the impression of sustainability through false or misleading claims. Learn how to avoid greenwashing.

October 7, 2024

Greenwashing definition:

When an organization creates the impression of sustainability through false statements or misleading claims.

Greenwashing is a pressing concern for anyone interested in a more sustainable world. And according to the European Commission, it’s a significant issue in today’s market.

While many greenwashing claims are intentionally deceiving, greenwashing can also happen by mistake. This occurs when an entity struggles to fully grasp the environmental impact of its practices and makes claims it can't support.

A 2021 European Commission study of 344 sustainability claims found that 59 per cent failed to support their claim with evidence and 42 per cent were considered false or deceptive.

Individuals who know the signs of greenwashing are less likely to purchase (or promote) green-washed products. Consumers who choose items with environmental labels or marks, like the FSC® label, support sustainable forestry.

Greenwashing is deceiving, so identifying misleading products can be difficult. This article helps equip the public with the knowledge to see through misleading claims and make more informed decisions.

Table of contents:

Identifying greenwashing tactics
The risks of greenwashing
Standing up to greenwashing
How can businesses avoid greenwashing?

Identifying greenwashing tactics

Greenwashing is frustrating for consumers who want to make informed purchases and for organizations contributing to real sustainability solutions. It can slow progress on environmental issues and make it difficult to know when actions have the desired impact.

A graphic highlights 5 common greenwashing tactics consumers should watch out for.

Understanding what greenwashing is not

It’s important to understand what greenwashing is, but it is also important to know what it is not. Greenwashing specifically focuses on misleading consumers regarding environmental practices. While an entity might be unethical in other areas, that does not necessarily constitute greenwashing.

Greenwashing specifically deceives consumers about environmental practices.

While these other violations are important to consider, without a proper understanding of what equates to greenwashing, it becomes even more difficult for consumers to identify deception around environmental practices.

Real-life examples of greenwashing

Greenwashing tactics can be creative and are often difficult to recognize. It's important to be critical and look for evidence to support environmental claims before making purchasing decisions.

Examples of greenwashing in action:

Volkswagen's "clean diesel" scandal: In 2015, Volkswagen installed software in its diesel vehicles that allowed it to cheat emissions tests. The cars would appear to meet clean air standards during testing but emitted significantly higher levels of pollutants in real-world driving conditions. This all led to a $14.7 billion settlement.
Shell’s climate strategy: Another example of greenwashing can be seen in the case of Shell, a multinational oil and gas company. In 2023, the company's directors were personally sued by ClientEarth over their "flawed" climate strategy, which was deemed insufficient to meet climate targets and put the company at financial risk. This legal action highlights the discrepancy between Shell's public image as a company with sustainable practices and its actual practices.
Katjes’ “climate neutral” fruit gum ad: The German Federal Court of Justice determined in 2024 that by falsely claiming its products were “climate neutral” in advertisements, Katjes (a confectionary company) engaged in deceptive marketing practices. Katjes' environmental partner, ClimatePartner, has announced it will discontinue the "climate neutral" label due to concerns about greenwashing.

When in doubt, rely on products with verifications or certifications provided by third-party groups like Forest Stewardship Council® (FSC®).

Here are a few ways consumers can spot greenwashing tactics:

Vague sustainability claims: Be wary of terms like "eco-friendly" or "natural" without specifics or certifications. Companies that truly have sustainable practices are open about their environmental impact and provide data to support claims.
Misleading photos or graphics: Pictures of nature can inspire thoughts of sustainability – even when a product is not actually sustainable. Look past the marketing and consider whether the item’s lifecycle is actually sustainable.
The subtle bait and switch: Greenwashing companies can direct attention away from a product's total environmental impact by highlighting a small, sustainable feature. For example, a water bottle company might advertise recycled plastic lids while the bottle itself consists of entirely new plastic.
A lack of transparency: Look for detailed information about a company's environmental practices. If it hides away (or fails to provide proof of) its environmental claims, that is a red flag.
Hollow emotional appeals: Protecting our planet is an emotional topic for many. Beware of greenwashing companies who seek to exploit this emotion by tugging at heartstrings without any meaningful environmental stewardship.

How FSC addresses greenwashing

FSC supports consumers and businesses by providing a label backed by a transparent and robust system. Its transparency comes from making criteria, processes, and performance data publicly available for external scrutiny, while its robust assurance system upholds rigorous standards, carefully issuing, approving, tracking, and monitoring claims, with the authority to withdraw them if necessary.

FSC is committed to preventing greenwashing within its certification system, which must meet strict standards for forest management, chain of custody certificates, and promotional licences. Every claim made by FSC clients must be approved by a third-party certification body before it may be used in the market.

This involves investigating companies that use the FSC label but fail to uphold the standards that ensure the rigor and credibility of the system. If these allegations are confirmed, FSC takes strong actions in response. You can trust products with the FSC logo.

Through these and other collective efforts, FSC labels and certification serve as a reliable indicator of responsible forest management and help prevent companies from misleading consumers with false environmental claims.

The risks of greenwashing

While greenwashing may appear to be a harmless marketing ploy, its consequences ripple far beyond misleading consumers. This deceptive practice lowers a customer's ability to make informed choices and poses a significant threat to real progress on environmental issues.

Greenwashing’s impact on the environment

Between September 2022 and September 2023, one in every four climate-related ESG risk incidents were tied to greenwashing.

This is an increase from their earlier report, which found one in five incidents tied to greenwashing. Moving from 20 per cent to 25 per cent in just one year suggests a concerning trend. Companies are increasingly resorting to greenwashing to appear environmentally friendly.

The same report found a staggering 59 per cent of companies in Asia, Europe and North America participated in greenwashing. That includes misleading claims regarding climate-related issues like global pollution and greenhouse gas emissions.

Greenwashing leads to serious consequences for the planet, including:

Discouraging sustainable practices: When greenwashing companies appear sustainable without real effort, it reduces the pressure for genuine change. Other companies have less incentive to invest in cleaner technologies, renewable energy, or sustainable sourcing and continue practices that harm the environment.
Delaying credible climate solutions: Greenwashing creates a false sense of progress on environmental issues. Companies can appear to be taking action when they're not, delaying real solutions and critical changes. This can significantly impact issues like climate change, where immediate and substantial reductions in greenhouse gas emissions are needed.
Increasing waste generation: Some greenwashing tactics can encourage a cycle of increased consumption. For instance, vague sustainability claims on packaging might make consumers believe a product has a smaller environmental footprint than it does, leading them to buy more of it. This can translate to increased resource extraction, production, and waste generation.

The RepRisk study also found that the financial sector was the second-largest greenwashing offender for the last two years.

The fact that financial institutions are often involved in greenwashing suggests that investments in fossil fuels are still a big problem.

How greenwashing backfires on businesses

Greenwashing isn’t only bad for the environment – it’s also bad for business. When greenwashing companies make false or exaggerated claims about their environmental practices, they risk losing the trust of their customers.

According to a survey conducted by KPMG UK, 54 per cent of consumers said they would switch brands if they discovered a company's environmental claims were misleading. Consumers are increasingly savvy and are actively seeking out companies with a genuine commitment to sustainability.

Here are a few other ways greenwashing harms businesses:

Damaged reputation: When greenwashing is exposed, it leads to a massive loss of trust and brand damage. Consumers feel misled and deceived, and negative publicity can spread quickly through social media and word-of-mouth.
Loss of sales: Consumers today are willing to pay a premium for sustainable products. But if a company is caught greenwashing, it can lose the trust of these potential customers, potentially leading to a drop in sales.
Regulatory scrutiny: Government agencies are cracking down on greenwashing with stricter regulations and fines. Companies caught greenwashing may face hefty penalties and legal action.
Increase risk of litigation: As consumers become more discerning about environmental claims, lawsuits alleging false or misleading representations may increase. Additionally, governments and regulatory bodies are introducing stricter laws and penalties for companies that engage in greenwashing, further increasing the potential legal consequences for such practices.

By implementing more sustainable business practices, companies can avoid the pitfalls of greenwashing. This can help build trust with consumers who are increasingly seeking out more sustainable products and services.

A graphic shows data detailing why greenwashing is bad for the planet and businesses. — FSC/ Jonathan Perugia

How greenwashing exploits the consumer

Misleading environmental claims directly exploit consumers. It causes them to believe they are making sustainable choices when, in reality, they may not be.

Greenwashing takes advantage of consumers' growing concern for the environment and their desire to support sustainable practices.

These are just a few ways customers are negatively affected by greenwashing:

Wasted money: Consumers who don’t know how to spot truly sustainable products can’t compare products accurately. This ambiguity allows companies to exploit consumer goodwill and charge premium prices for products that offer little to no environmental benefit.
Disillusionment or fatigue: When consumers discover that companies have participated in greenwashing, it can breed skepticism toward environmental marketing efforts. As a result, consumers may become disengaged, making it increasingly challenging to find the products they want and need.
Compromised values: Greenwashing creates a disconnect between a consumer's environmental values and their purchasing decisions. When misled by greenwashing, consumers believe they're acting sustainably when they might not be. This can undermine their ethics and their core values.

These consequences highlight why businesses must carefully evaluate their own environmental claims and leverage verified certifications in their sustainability efforts.

A group of four people standing outdoors smile while discussing ways to stand up to greenwashing. — FSC/ Jonathan Perugia

Standing up to greenwashing

Countries and individuals around the world are increasingly taking action to eliminate greenwashing and promote genuine environmental sustainability.

One significant development is the Paris Agreement, an international treaty designed to combat climate change. Under the Paris Agreement, 195 parties from around the globe have committed to reducing greenhouse gas emissions and transitioning to a low-carbon economy.

This agreement encourages transparency and puts pressure on companies to avoid greenwashing tactics, as their environmental practices could be exposed if they don't align with public claims.

The Asia-Pacific region

Countries across the Asia-Pacific region are addressing greenwashing and striving to promote genuine environmental sustainability.

Governments in countries such as Japan, South Korea, and Australia have implemented regulatory measures to enhance transparency and accountability in environmental claims.

For instance, Japan's Ministry of the Environment has developed guidelines for green product labelling to prevent deceptive marketing practices, while South Korea and Australia have introduced penalties for companies found guilty of greenwashing.

Additionally, countries in the region are investing in consumer education and awareness campaigns to empower individuals to make informed choices and identify more sustainable products and services.

Through these efforts, countries in the Asian Pacific region are working to limit greenwashing and foster a culture of environmental responsibility.

Bottom line: The Asian-Pacific region is cracking down on greenwashing with regulations for clear environmental claims and consumer education initiatives to promote genuine sustainability.

Europe

As global concern for environmental sustainability grows, regulatory bodies across Europe are increasingly focused on fighting greenwashing. This includes the European Union (EU), which has implemented various measures to promote transparency and accountability in environmental marketing. This includes new rules for consumer empowerment and the proposed Green Claims Directive.

Additionally, a 2020 refresh to the Action Plan for Financing Sustainable Growth now highlights greenwashing as a top priority. Greenwashing was also cited over 100 times in the EU’s 2022-2024 Sustainable Finance Roadmap and was identified as a key issue.

Following suit, the United Kingdom is tackling greenwashing through its Green Finance Strategy, which aids environmentally friendly businesses while ensuring transparency. Additionally, regulatory bodies like the Advertising Standards Agency (ASA) offer businesses clear guidance on avoiding misleading environmental claims in advertising.

The Competition and Markets Authority (CMA) further strengthens this effort with its Green Claims Code, a six-point framework for verifying the legitimacy of environmental claims.

Bottom line: Europe is establishing a comprehensive framework to combat greenwashing, fostering trust among consumers and investors, and supporting genuine sustainability efforts.

North and Central America

The fight against greenwashing is gaining momentum across North America, with both the United States and Canada taking steps to address misleading information. In March 2021, the U.S. Securities and Exchange Commission (SEC) announced its new Enforcement Task Force for climate and ESG issues to help identify and address ESG-related misconduct. The U.S. Federal Trade Commission (FTC) also issued the Green Guides to help marketers ensure their environmental claims are truthful, substantiated, and don't mislead consumers.

Canada has also implemented policies to take a stronger stance against greenwashing, including the 2024 amendments to the Competition Act, which will target deceptive environmental marketing claims.

Many countries in Central America have also committed to the fight against greenwashing. Chile drafted a new bill which aims to prevent and punish greenwashing practices. Meanwhile, Brazil and Columbia both have bills designed to make it more difficult for companies to promote misleading sustainability claims.

Mexico, on the other hand, offers consumer protection laws that can be used to challenge misleading claims, but they do not specifically target greenwashing.

Bottom line: North and Central America are witnessing coordinated efforts to combat greenwashing.

Africa

At the time of this article’s publication, greenwashing remains a topic of concern for Africa with very little regulation. A 2022 report by Dr. Jessica Omukuti (a Research Fellow on Inclusive Net Zero for the Oxford Net Zero Initiative) found that approximately half of the continent’s public companies set emissions targets. However, Africa has no policies addressing greenwashing or surrounding Environmental, Social, and Government (EGS) criteria.

Some African leaders and thinkers argue that since the continent has lower greenhouse gas emissions, it's inequitable to expect the continent to hinder its development for the sake of global emission reduction.

Bottom line: A lack of greenwashing regulations creates challenges for mitigating the continent's environmental impact and reducing misleading marketing claims.

How can businesses avoid greenwashing?

Whether it’s intentional or accidental, greenwashing is deceptive. That means even with this knowledge in mind, it can be difficult to spot greenwashing in action.

Organizations can rely on sustainability certifications to help consumers identify their products as actually eco-conscious. Pursuing these certifications can help companies break through the noise and stand out as transparent organizations that are committed to lessening their environmental impact.

Calling out and eliminating greenwashing is essential for the health of genuine environmental sustainability efforts.

By certifying products sourced from responsibly managed forests, FSC helps consumers make informed choices and helps companies stand out from those making false sustainability claims.

Ultimately, asking the question, “What is greenwashing?” empowers individuals and organizations to support more sustainable practices for a brighter future.

Additional resources

For readers seeking further insights into greenwashing, the WWF Guide to Greenwashing serves as a valuable resource. This guide offers practical tips and information to help consumers navigate the complex landscape of environmental claims and distinguish genuine sustainability efforts from deceptive practices.