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Behind the Label: Greenwashing Tactics

In an era where environmental consciousness is of high priority, corporations are under immense pressure to demonstrate their commitment to sustainability. However, the true nature and implementation of said sustainability are vague. Greenwashing is a marketing process that involves conveying false impressions about how a company’s products are environmentally beneficial. Making unsubstantiated claims, using misleading terminology, and deploying “natural” imagery are all ways in which companies can deceive consumers into purchasing products that do, in fact, harm the environment. The consequences of greenwashing are far-reaching. Businesses are quick to label their products as “eco-friendly”, “natural”, and “green”, however, the reality behind these buzzwords is often distorted. Disingenuous marketing tactics like these pose a significant breach of trust between the consumer and producer. Examining the greenwashing tactics employed by corporations is a lens through which to analyze consumer behavior and how these strategies may affect purchasing decisions.

Extensive research proves that greenwashing is a common occurrence, shown specifically in a 2023 study commissioned by the EU which found that 53% of eco-friendly claims are vague, misleading, or unfounded, and 40% have zero confirming evidence (Nodoph, 2023). In the United States specifically, 68% of executives anonymously admitted to greenwashing (Peters, 2022).

Companies greenwash for a few reasons. Notably, consumers are believed to pay up to 25% more for a ‘green’ branded product, allowing companies to upcharge and increase profit (Nodoph, 2023). In addition, as the world commits to a more sustainable future, regulations and policies not only force companies to change but also increase media attention to these proposed changes. Consumers are now aware of a company’s responsibility toward the planet and change their behavior accordingly. Lastly, these trends are attributed to an influx of cheap capital and investment into sustainability. Adopting sustainability grants a company access to a plethora of investment opportunities. To quickly address the growing climate concern, companies have turned to greenwashing, which is believed to increase profit, but at what cost?

To increase profit and appear environmentally conscious, companies are implementing more sustainability initiatives, but these initiatives often lack real steps toward sustainability. As a result, greenwashing is becoming more and more subtle and difficult to identify; however, here listed are a few of the most common strategies employed by corporations.

  1. Vague or misleading wording allows companies to give consumers a false impression of their products’ environmental impact. Marketing terminology such as “eco-friendly”, “natural”, or “organic” typically lacks clear definition and can be manipulated as environmentally safe without specifying exact benefits. A popular food service, HelloFresh, claims carbon neutrality, which is only about their delivery methods, not accounting for the single-use plastic wrapping or production emissions to prepare the food (Changing Markets, 2023).

  2. By highlighting a single, minor environmental benefit, companies are able to divert attention away from more serious concerns. For example, Starbucks unveiled a new ‘strawless’ lid that would reduce environmental impact. The issue, however, is that the new lid is composed of more plastic than the old lid and straw combined (Changing Markets, 2023). Promoting a single product or initiative, consumers may ignore the company’s overall commitment to sustainability.

  3. A major strategy deployed by companies is to utilize false eco-labels and certifications. A label may closely resemble a legitimate certification, thus deceiving consumers into buying the ‘green’ narrative of the company. The popular fast fashion brand H&M, for example, often uses green tags claiming ‘environmental consciousness’ however, 96% of these claims do not hold true. This tactic is prohibited in many countries but extremely hard to enforce, as it requires constant investigative research and funding.

  4. Perhaps the most common occurrence of greenwashing is to strategically use green, natural images that suggest eco-friendliness. For example, scenes of a river, mountains, leaves, or even the use of the color green imply sustainability without offering any proof of the company’s legitimate actions.

  5. Companies may have environmental benefits but exaggerate these accomplishments. For instance, hybrid cars may be marketed as 100% emissions-free; however, the significant decreases in emissions of these cars are still emissions (Guardian, 2023). In this way, companies may also compare their product to a less environmentally beneficial product, making their own seem better than it actually is. Exaggerated marketing of the environmental impact of a product misleads consumers.

Engaging in greenwashing and directly deceiving consumers is a dangerous strategy for corporations. In 2021, a McKinsey survey found that 88% of the Gen Z generation in the US do not trust ‘green’ claims from brands (Nodoph, 2023). There is a confusion that has developed between consumers and producers. When consumers don’t trust a company and are confused by their “green” initiatives, they may not continue using the company’s services or products. Pressure from purchasers to shame businesses that adhere to greenwashing has also led to significant and often public backlash from investors. The reputation of a company is extremely important for success. The Harvard Business Review conducted a study of 202 publicly traded companies that committed to sustainability, analyzing their American Customer Satisfaction Index (ACSI) scores (Kassinis, et al., 2022). It was determined that companies speculated that greenwashing suffered a 1.34% drop in score. This may seem minimal but is significant in such a competitive environment where even a drop of 1% has been shown to decrease earnings (Kassinis, et al., 2022). Consumers who believe a company is greenwashing directly affect how they experience its service or product, but only to a certain extent. It is important to note that brands or items held in high regard outweigh a consumer’s affinity for sustainability. Beyond a certain point, the factor of environmental consciousness ceased to matter to consumers. However, as movements for sustainability increase, policy tightens, and advocacy for change becomes louder, the practice of greenwashing may become more and more frowned upon.

Consumers rely on eco-friendly labels and environmental certifications to make informed purchasing decisions; however, these misleading tactics have created a world of skepticism and confusion.

A growing necessity for companies to respond to the impending global climate disasters has sparked deceitful marketing known as greenwashing. Consumers rely on eco-friendly labels and environmental certifications to make informed purchasing decisions; however, these misleading tactics have created a world of skepticism and confusion. The reputation, transparency, and credibility of a corporation all play a role in consumer behavior. Greenwashing continues to be an issue and will continue to be as the urge for environmental cautiousness grows stronger, but it is apparent that to avoid loss, companies will need to act green, not just display it.

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