GREENWASHING

→ “Activity designed to mislead consumers regarding the environmental practices of a firm or the
environmental benefits of a product or service.” (Dahlstrom & Crosno 2021)

→ Situations in which there is a significant gap between the expressed and genuine commitments to
sustainability (Mission of the firm)

→ “The act or practice of making a product, policy, activity, etc. appear to be more environmentally friendly
or less environmentally damaging than it really is.” (Merriam Webster)

Note: This practice can refer to either a company or its products.

This practice is Increasing. More companies attempt to boast the ecological merits of their products.

Environmental performance and communication:

Example Nestle:
A NOTE ON PLANTING TREES

• Studies may have overestimated the amount of carbon that trees can sequester • Tree planting can harm
healthy ecosystems (savanna, grasslands)

• Opportunity costs: planting trees scheme may divert investment from other more efficient solutions (forest
protection and regeneration)

• It does not address the root cause of climate change: increased emissions

HOW TO AVOID GREENWASHING

Firms can reduce the likelihood of greenwashing by considering the following filters:

→Central: Is the claim central to the product usage and purchasing?

Note: Centrality, in the context of avoiding greenwashing, refers to ensuring that the environmental claims
made by a company are directly related to the core usage and benefits of the product or service. This means
that the sustainability features or benefits being advertised should be a fundamental aspect of the product
or service, not just added as a peripheral attribute to appear more eco-friendly.

For instance, if a cleaning product claims to be eco-friendly because it uses biodegradable ingredients, the
centrality would be high if those biodegradable ingredients are crucial to the product's cleaning
effectiveness. On the other hand, if an electronic device claims to be green merely because its packaging is
recyclable, the centrality of this claim would be low since the packaging has little to do with the device's main
function or performance.

Ensuring centrality in environmental claims helps prevent misleading impressions that a product or service is
more sustainable than it actually is, thus reducing the risk of greenwashing.

→ Relevant: Does the claim address criteria relevant to consumption?

→ External Verification: Have the claims been subjected to on-going assessment by a third party?

→Specific: To what extent are the product claims specific and meaningful? (e.g., “organic” vs. “natural”)

→ Truthful: Are the product claims truthful?

HOW TO DO IT RIGHT - PRACTICALLY

→Standardized terminology (e.g., ethical, sustainable are not standardized)

Standardized Terminology: Ensure that all terms used to describe the environmental aspects of products or
services are clear, standardized, and universally accepted. This avoids the misuse of terms like "sustainable"
or "eco-friendly," which might be vague or misleading without a specific, agreed-upon definition.

→Standardized measurement: Standardized Measurement: Adopt standardized methods for measuring and
reporting environmental impacts. This makes it possible to compare products or services on a like-for-like
basis and provides transparency. For example, calculating the carbon footprint of products should follow
recognized international standards.

→Standardized labeling (certification labels): Utilize certification labels that indicate compliance with certain
environmental standards. These labels, like the USDA Organic label, should be based on rigorous criteria and
indicate that a product has been independently verified to meet specific environmental performance
thresholds.

Note: CERTIFICATION LABELING

• Eco-labels: reflect adherence to some standard associated with food safety and environmental
performance
• Organic: The USDA definition uses the term organic to refer to food that is generally free of synthetic
substances; contains no hormones or antibiotics; has not been irradiated or fertilized with sewage
sludge; was raised without the use of most conventional pesticides; and contains no genetically
modified ingredients
• Avoid Vague Labeling: Avoid using terms that are open to interpretation, such as "natural," which can
be misleading. Every claim should be precise, meaningful, and supported by verifiable data.

Good Example – Chipotle:

Their strategy centers around having respect for all participants in the supply chain, including animals,
farmers and the environment. Chipotle demonstrates this commitment through significant financial
contributions to sustainability via the Chipotle Cultivate Foundation, promoting a sustainable food future.
This shows a commitment that goes beyond marketing to actual practices that have a tangible positive
impact.

DISCUSSION: IS THIS GREENWASHING? ATM paper receipt

Why not?
• Not central to HSBC’s activity?

• Putting responsibility on the consumer

• Building green image instead of real initiatives

• Could have more efficient (and less costly) actions:

-Change default option on ATM

-OR Raise awareness on ATM, at the point of decision