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From paper straws and recycled packaging to sustainable practices and renewable energy, as well as reduced emissions and carbon neutrality—these are a few of the things some businesses tout in pursuit of price premiums and to gain traction with environmentally conscious consumers. In so doing, these businesses will often implement highly performative measures to influence their outward brand image, while reducing costs and maintaining unsustainable practices behind the scenes. This process of obfuscating the truth behind a “green” or environmentally-friendly illusion is often called “greenwashing.” The term originated in a 1986 essay by Jay Westerveld, in which he criticized a hotel for asking guests to reuse their towels in order to save on water, while simultaneously destroying its surrounding wildlife in pursuit of expansion.
Today, the term has gained broader usage as a reference to any business claiming to protect the environment while concealing harmful actions. Most recently, a Carbon Market Watch report accused the organizers of the 2022 FIFA World Cup in Qatar of greenwashing when it claimed that the mega-event would be completely carbon neutral. The reported emissions were in fact less than one third of their actual volume, according to Carbon Market Watch, and the organization is not only under greater pressure to reduce its emissions, but has also lost much of its credibility in making similar claims in the future. “This is not a harmless exercise, as it misleads players, fans, sponsors and the public into believing that their (potential) involvement in the event will come at no cost to the climate,” the report noted.
Greenwashing is not only deceptive in nature, but can harm the environment, the consumer, and even the business itself, thus proving its own unsustainability.
Greenwashing as a response to consumer awareness
Sustainability buzzwords were not always a part of the average business’s lexicon. On the contrary, they emerged in marketing as a response to growing awareness among consumers. The saying often goes “the customer is always right,” and there is a large quantity of sales, as well as a potential price premium, in presenting a business as sustainable.
According to the 2021 Global Sustainability Study, 34% of consumers worldwide reported a willingness to pay a premium for sustainable products. This value climbs to 39% and 42% among Generation Z and Millennials respectively, indicating the shifting trend. Many businesses, upon assessing their markets, will find that they can expand their market share and increase their revenue by presenting themselves and their products as sustainable and environmentally-friendly. As markets continue to become competitive in the age of large-scale globalization, this process becomes necessary for many businesses to keep afloat and maintain their presence in their respective industries.
Sincerity comes at a price
This is not to say, of course, that all businesses promoting their sustainable practices are greenwashing. On the contrary, many businesses are sincere in their efforts. This often manifests in small businesses, or businesses providing more boutique experiences that cater to niche markets. These business models often cater to consumer groups that are already willing to pay a premium, and the scale of the business means that there is no need for bulk sourcing on a massive scale. Small and medium enterprises (SMEs) often fight to present themselves as sustainable alternatives for consumers, but must also pay the price for that in pricing and efficiency.
On the other hand, larger businesses catering to mass markets benefit greatly from economies of scale. Fast fashion, mass merchandising, and food and beverage businesses will often resort to unsustainable production and distribution methods in order to cater to their enormous target markets. This includes large-scale cotton farming, which depletes water supplies, and selecting cheap, resilient packaging materials like plastic. These businesses will often resort to making a handful of seemingly-sustainable shifts, particularly in areas where the consumer can see them, in order to greenwash the reality of their business choices.
At the end of the day, many mass-market businesses are forced to rely on cost-reduction to maintain low prices if they are to match consumer demand. This is particularly significant in the current economic climate, where the global cost of living crisis has resulted in many consumers shifting to seeking value and longevity in the products they purchase over environmental consciousness. While consumers are still willing to pay a premium for sustainable products, that premium has fallen in light of the overall amount that they are willing to pay. As a result, the additional costs of sustainability on a mass market scale would not translate into a viable price, and the primary goal of the business—making a profit—would be negatively affected.
Greenwashing often backfires
That being said, none of this is a justification for greenwashing. Businesses using buzzwords to conceal unsustainable practices are often found out, and will come under fire for it. In the age of social media and widespread internet anonymity, it is becoming increasingly difficult for businesses to keep secrets. Whistle blowing is much easier in the modern age as a result of things like VPNs, fake accounts, and voice generators. Even within their mindful spending, consumers seek both affordability and sustainability in the products available to them. When businesses not only fail to meet these expectations, but attempt to deceive consumers into thinking that their products are sustainable, the business’s brand takes the biggest hit.
In 2018, Starbucks came under fire for promoting “straw-less” lids in order to be more sustainable and reduce their plastic waste. While the notion itself was well-founded, the new lids included more plastic than both the previous lids and their straws combined. Starbucks’s defense of this was not in denial, but in claiming that the plastic is recyclable, while making no promises to participate in that recycling process themselves. Similarly, a McKinsey & Company report highlights how fast fashion brands like Zara and H&M are struggling to reap the benefits of vague claims of sustainability and conscious consumerism, whereby consumers not only demand environmentally conscious products, but clear and detailed road maps and steps to which these brands can be held accountable. Despite encouraging consumers to donate used, or “preloved” garments to affiliate recycling companies to incorporate them into their supply chains, many fast fashion companies only apply these processes to limited collections, incorporating them into as little as 0.7% of their overall product portfolio.
Change is needed
As consumers begin to lose trust in the businesses they deal with, their attention will gradually shift to alternatives, and slowly but surely, greenwashing can lead to a substantial reduction in market share, brand loyalty, and ultimately revenue. To put it simply, greenwashing is showing itself to be inherently unsustainable, both for the environment and for the businesses involved.
Businesses and entrepreneurs who see this sooner can begin to meet the consumers’ needs, and develop realistic plans and strategies with actionable and measurable targets for sustainability. These plans will not only appeal to consumers, but can lead to innovation that results in changes to industry-wide standards for sustainability. As new methods and practices become normalized, there can be further research and innovation to make them cheaper and more broadly accessible, resulting in higher profits. Such investments are significantly longer-lasting and more beneficial to all the stakeholders involved than large-scale expenditure into greenwashing-based marketing campaigns that can very quickly fail and lead to scandal.
The impacts of greenwashing will continue to make themselves known over the coming years, and if left unchecked, can lead to severely detrimental outcomes for the environment and for the global population as a whole. Many customers have already elected to boycott unsustainable businesses, and will participate in their own activism to raise awareness. However, governments can also introduce laws and regulations to pressure businesses to adjust their practices, as well as subsidies to facilitate the process. Ultimately, environmental sustainability is a shared responsibility across all stakeholders. Failure to uphold that responsibility will inevitably lead to harmful consequences for everyone, and the short term benefits of profit and convenience will pale in the face of life-threatening consequences. It is up to consumers, activists, and governments to put pressure on businesses to paint their entire supply chain green, rather than just what the consumer sees of it.