Sustainability Must Be the End Goal
From a factual standpoint, this is no longer up for debate, and more companies are joining this zeitgeist. It’s all the more unfortunate, then, to address that this is often pursued only performatively: greenwashing is the term that echoes most loudly in this context. According to the Oxford Dictionary, greenwashing describes a strategy in which entities attempt to create an image of environmental responsibility through the deliberate spread of misinformation. Here, it’s essential to emphasise that misinformation doesn’t necessarily have to mean falsehood. Often, a company’s “green claims” are even true. However, the core business of the company in question is usually not environmentally friendly. In other words, companies use this tactic to distract from other problems caused by their products. Labels, certifications, and seals of approval are also not always reliable indicators. Terms like “climate-neutral,” “sustainable,” “organic,” or “fair” appear in association with products and services almost everywhere. But who can truly make sense of them?
According to an EU study, sustainability advertising is often vague, misleading, or unfounded. Consumer protection advocates call for greater clarity: through regulations, checks—and lawsuits if necessary. Greenwashing, then, is not only a misleading marketing tactic but also systematically undermines consumer trust and the efforts of companies that genuinely strive for environmental and climate protection. This may sound drastic, but it also suggests that there must be a more functional solution. So, let’s take a closer look at greenwashing, its ecological and social implications, and, of course, how we can address this problem.
Background
Contrary to popular belief, greenwashing is not a new trend; the term has been around since 1986. Environmental activist Jay Westervelt used it to criticise hotel companies that, with “save the environment, use a towel twice” stickers, attempted to distract from the hotel’s other environmental impacts. In essence, greenwashing refers to misleading or false environmental claims, though there is still no standard definition. By the way, the term “sustainable” always refers to the threefold concept of ecological, social, and financial sustainability. Greenwashing isn’t necessarily a deliberate deception or lie; it can also arise unintentionally from a lack of data, ignorance, or insufficient awareness. This may occur when companies are unaware of the environmental impacts of their products, supply chains, and/or services, or lack the know-how or resources to communicate environmental aspects correctly.
The status quo is as follows:
Adding to this is the varying understanding of what “sustainable” means, which can also lead to greenwashing claims. While some believe that satisfied shareholders are the most sustainable outcome, others might emphasise product longevity. However, a holistic perspective is often lacking. The previously mentioned lack of clear definitions plays right into this problem. In short: knowledge and transparency are lacking.
Greenwashing and Its Consequences
The often severe consequences of greenwashing for companies remain largely the same in all scenarios. When the green façade starts to crumble, and supposedly sustainable products turn out to be not so sustainable, companies risk significant reputational damage with shareholders and consumers. Many companies underestimate the negative impact this can have on corporate value.
It is therefore essential to consider the risk of greenwashing in the business model and operations to assess and mitigate potential impacts early on. This should also focus on increasingly complex global networks of suppliers and business partners. Various regulations, such as the EU Supply Chain Act, hold companies accountable not only for their actions but also for those of their partners.
Measures Against Greenwashing – What Really Works?
Different interpretations of what “sustainable” means can easily be reconciled to cultivate a universal understanding of sustainability. Define a standardised understanding of sustainability. Include external stakeholders, rely on scientific foundations, and, above all, think holistically. Create transparency in your communication by maintaining an open dialogue about how you measure your sustainability and clarifying where tangible errors still exist. Open and honest communication about strengths and weaknesses minimizes the risk of inadvertently engaging in “greenwashing.”
We also share the belief that the EU Taxonomy Regulation represents a fundamental step against greenwashing—a regulation that provides a standardised evaluation of “sustainable” practices and activities. A quick detour on the EU Taxonomy Regulation: in 2020, the EU established a framework for classifying sustainable economic activities to make sustainable practices more visible.
However, two potential effects need to be addressed, which are not necessarily excluded by the EU Taxonomy:
We believe it’s essential to show what a company is already doing. However, if we withhold information about what hasn’t been achieved yet, this undermines the authenticity of our actions and statements, potentially rendering our sustainability efforts absurd in public perception. Fundamentally, it’s about transparency: statements must be understandable, accessible, and relevant. Talk not only about strengths but also about the weaknesses you’re still working on. Oatly and Patagonia set an example. Besides many other activities, Oatly launched a platform at fckoatly.com, which summarizes common criticisms and complaints against the company, creating transparency. Patagonia also sets standards in terms of authentic sustainability. The company consistently emphasises education and awareness in its strategies. Patagonia makes it clear that as a brand in the fashion industry, it operates within an inherently “unsustainable” system.
Mistakes in Calculation
And what is the cost of choosing the wrong path? What is the cost of giving products and services a false image, presenting them in a misleading light, or portraying them as something they are not? From a sustainability perspective, deliberate false representation is tantamount to “doing nothing”—the state of total inactivity, with no purpose, goal, or ambition. As we all know, that is the absolutely wrong path in this case. Misguided funds and efforts spent on greenwashing would be far more effective if invested in genuine sustainability. Unfortunately, there are still only vague estimates of the costs of climate change damage and lost ecosystem services. Once one understands the catastrophic costs of “doing nothing,” genuine sustainability measures seem like a bargain. It’s a calculation worth keeping in mind.
Conclusion: It’s Not Easy Being Honest
Green advertising claims in Germany are already subject to strict requirements. But in cases of doubt, courts usually decide on a case-by-case basis. The EU’s proposed directive takes it a step further. Environmental claims about products, services, or the company itself, for which there are no specific rules—such as “climate-neutral”—must be substantiated and communicated. These claims must:
Information to support an environmental claim can be made available to consumers through a description, a QR code, or a link on the product.
Solid corporate governance is essential to minimise the reputational risks associated with greenwashing and its accompanying allegations. It’s important to review existing processes and controls to prevent greenwashing to see how effectively these measures protect the company’s sustainable success and public reputation. Additionally, relevant business partners, such as key suppliers, should be evaluated to identify potential risks early on related to economic exploitation, environmental violations, health and safety violations, and human rights abuses that could, if unknowingly present, cause significant public perception damage.
And lastly: We genuinely have to mean it! 😊🌍 Those who don’t strive to be and act more sustainably will only ever engage in greenwashing in their communications.
Otherwise, bye-bye greenwashing. Or what do you think? 🤔
