SGS green mark Series | How greenwashing threatens your business

Living a ‘greener’ life is the goal for more and more people – buying products with no, or a significantly reduced, impact on the planet. Because of this, they are drawn to products labeled ‘natural’, ‘sustainable’, ‘eco-friendly’, etc. However, while these terms sound good, but what do they really mean? 

A 2022 survey of products available on European Union (EU) markets found that 75% now carried an environmental claim or label. However, when the researchers looked a little deeper, they realized 42% of these claims were potentially false or deceptive. Further analysis of 344 products with dubious claims found that in over half of the cases, the trader had not provided sufficient information for the consumer to check authenticity and in 59% of cases the information to support the claim was not easily accessible. Finally, in 37% of cases, the claim amounted to little more than a vague term such as ‘conscious’, ‘eco-friendly’, or ‘sustainable’. The use of these terms conveys a general impression of sustainability without providing any quantifiable evidence that they were produced in a way that has less impact on the planet.

This is greenwashing, and it is destroying trust in brands and industry.

Greenwashing

Greater consumer demand for environmentally friendly products creates a business opportunity. Saying a product is more sustainable than a competitor gives it a natural advantage in markets where the consumer is actively seeking products that match their green ethos – for example, Millennials.

However, where there is opportunity, there is also temptation. 

Greenwashing, or green sheen, is a term originally coined in 1986 by the environmentalist Jay Westerveld in an essay about the hotel industry’s ‘save the towel’ initiative. He surmised that customers were being asked to reuse towels not to save the environment, but as a way for the industry to save money. He defined the term greenwashing as describing an ineffectual environmentally conscious act where the fundamental objective is to increase profit.

There are two basic types of greenwashing. Firstly, claiming credit for an existing production method or decision under the pretext that it is more sustainable. For example, eliminating plastic packaging to save costs but claiming it is to be ‘green’. Secondly, an organization can choose to lie about a product’s sustainability by using, what the EU described as, “vague, misleading or unfounded” words or phrases, environmental imagery, or even false certifications.  

The practice of greenwashing is widespread, goes across all industries, and impacts all territories. A 2022 Harris Poll survey of 1,491 executives conducted for Google Cloud found that over half admitted their company may have overstated its sustainability efforts, and around two-thirds questioned the authenticity of sustainability initiatives.

Greenwashing harms businesses

It is not just company executives who question the reliability of environmental claims. An Edelman Trust Barometer Special Report from 2019 found that only 34% of consumers now trusted the brands they buy.  This is a shocking figure, it means 66% of consumers do not trust the companies and brands they buy from. In part, this may be because many claims are being made about products but very few come with trusted, scientific support.

Trust is instrumentally important to businesses. Consumers are already wary, wise to greenwashing techniques such as labels claiming ‘50% more recycled materials’. The ambiguity in this phrase will ring an alarm bell in many people’s heads. If the original recycled content of the product was 50+%, then ‘50% more’ is impressive. However, if the original content was only 2%, the statement may still be technically correct, but that is not the impression they are trying to give to the consumer. 

In a world where consumers can access the vast reserves of the internet from a device in their pocket, it is no longer good enough to make unsubstantiated or purposefully misleading claims. Greenwashing destroys trust and leads to reputational damage for the organization and the industry. It also poses an investment risk and, increasingly, may result in legislative and regulatory penalties. 

Governments act

Markets rely on trust to operate, but greenwashing undermines trust while placing consumers at risk. Governments around the world are therefore starting to respond. 

On January 17, 2024, the European Parliament approved the text for a new EU directive designed to empower consumers by banning the use of unsubstantiated and generic environmental claims. This is part of a much larger package of measures designed to significantly reduce the environmental footprint of products consumed in the EU. Measures include the Ecodesign for Sustainable Products Regulation, the Right to Repair Directive, and the Green Claims Directive. The Green Claims Directive targets the proliferation of environmental labels and will require approval by the European Commission for all environmental labeling schemes, including those originating in a third country. 

In the US, the Federal Trade Commission (FTC) has threatened almost 700 marketing companies with civil penalties if the claims they make about products cannot be corroborated. While this warning relates to several different claims, it is clear evidence the FTC is watching and willing to act.  

The FTC is also revising its ‘Green Guides’, which provide marketers with guidance on making environmental claims. Since being first issued in 1992, they have been revised multiple times, with the next iteration expected to be released in 2024. At this time, businesses can expect renewed activity around the subject of greenwashing in the US. 

Bringing back trust

Transparency builds trust in environmental claims, and one way to achieve it is through independent, scientific product evaluations. The analysis must be conducted against relevant and globally recognized standards, such as ISO 14021 for environmental labels and declarations, EN 13432 for packaging compostability and biodegradation, EN 16640 for biobased content, and ASTM D6400 for industrial compostability. 

Consumers also need a way to confirm any environmental claims. Remember, when the European Commission surveyed products available on EU markets, they found over half of the traders had failed to provide sufficient information for consumers to make an informed decision and in 59% of cases the information was not easily accessed. Without true transparency, trust diminishes and reputations are damaged. 

SGS solution

Our Environmental Claim Certification and Verification (ECCS or SGS green marks) is a proven way to demonstrate the validity of environmental attribute claims. Utilizing the SGS logo, which is recognized around the world, they demonstrate compliance with standards relating to claims such as product carbon reduced, product carbon footprint, hazardous substances assessed, recycled content, PFAS screened, biobased, PVC free, industrial compostable, and biodegradability. 

All products are independently evaluated against pre-defined standards and, once compliance has been confirmed, the product can carry the SGS Green Marks, which contain details of the environmental claim, the standard(s) it has been assessed against, and a QR code that gives the consumer access to information that verifies the label and the claim. 

At a time when trust is being undermined by greenwashing, the SGS Green Mark is the easy and simple way to build up your reputation while taking advantage of the opportunities created by an increasingly eco-minded consumer base. 

Please subscribe and contact us at TIC Mall for more details.  

上一個

下一個