Greenwashing is currently on an unfortunate upswing. The term refers to a situation where companies use “green PR” or “green marketing” to create the misleading impression that their products or services are environmentally or socially responsible. Consumers are increasingly looking for environmentally and socially responsible brands and services for which they are prepared to pay even slightly more than they normally would. This small extra, among other factors, can encourage companies to greenwash their products and services. In times of economic uncertainty, such as those caused by the pandemic, greenwashing can seem like a particularly attractive option.

Perhaps the most common example of greenwashing is a clothing brand whose products are manufactured under highly unethical conditions and everything from manufacturing to transport generates large emissions. However, the brand promotes itself as being more ecological and responsible by using biodegradable packaging materials instead of just plastic.

The ecosystem is not the only casualty, as the reputation of a greenwashing company can also take a hit.

Greenwashing often distorts the facts, undermining positive efforts to tackle climate change, carbon emissions, biodiversity loss, unsustainable water use, waste generation, air pollution, and deforestation. Dishonest products and organizations can also mislead environmentally aware customers and, in the long run, the practice can pose serious risks to the whole ecosystem.

The ecosystem is not the only one to suffer, as the reputation of greenwashing companies can also be damaged. Particularly in the current age of the Internet, the issue has become more visible and information is spreading rapidly. It should also be remembered that Finnish legislation, for example, prohibits misleading marketing.

Growing awareness, growing pressure

For some time now, companies have been accused of exaggerating their “green” credentials. Environmental activists first used the term “greenwashing” in 1986. However, consumer and investor awareness has certainly increased in recent years. According to Inriver, 62% of British consumers said they would reconsider their purchasing decisions if retailers provided better information about the negative environmental impact of delivery, for example.

Investors are also increasingly aware of environmental issues. According to a 2020 survey by Schroders, 60% of respondents said that actively investing in environmentally responsible companies is their top priority, up from 38% in 2019. According to SwissRe, investment funds are increasingly flowing into green initiatives, with global environmental, social, and governance (ESG) assets expected to exceed $53 trillion by 2025.

How can NordCheck help?

Greenwashing is increasing the unfair competitive advantage between truly green and non-green companies. Responsible companies will lose large advantages and their position will be weakened.

At Nordcheck, we can help by documenting companies’ issues properly, starting at the grassroots level. With Modern Compliance solutions, we document everything from ethical issues to sustainability management.