PART 2: Why Do Companies Greenwash?

The shortest answer is greed, followed closely by competition, though there are other more subtle reasons. Greenwashing can even be unintentional, however that does not mitigate the damage, and therefore the best protection against this pitfall is awareness. (The damage that can be done will be explored in Part 3 of this series).

We need to be clear what we mean by greed. Greed is not the need or desire to make a profit. We are pro-business and pro economic growth and development, as long as it does no harm to people or our planet. Greed is a the focus solely on increasing profit at all other costs. Greed is short-term thinking out of personal interest only. But greed is often detrimental to one’s own self-interest.

One of the biggest greenwashing scandals ever hit the news in 2016, when it was discovered that Volkswagen had installed secret software that would defeat emissions testing in their line of supposedly “clean diesel” cars. In the US, they had advertised heavily and sold hundreds of thousands of cars to people who wanted fuel-efficient clean diesel cars, only to be found out. The result was the the recall of over 500,000 cars, billions of dollars in fines, a massive share price drop, and several executives going to prison. Read the report here.

Greed: It has been shown in numerous studies over recent years that people not only want to live more sustainably, but are willing to pay more for it. (See the 2018 Nielsen Report). The green/eco/sustainability market is huge and growing rapidly, and companies know that whoever can crack that market will see rapid growth in brand loyalty and profits, and gain an edge over the competition. Unfortunately this can be a bit too tempting for companies whose highest purpose is to increase quarterly sales and please their shareholders, with little or no care for stakeholders. This short-sightedness and lack of an altruistic Higher Purpose is most often what leads to greenwashing.

Competition: When a company sees that another company is profiting from the green movement they feel pressure from their shareholders to find a way to compete, even if their products are not up to it. Therefore, greenwashing begets greenwashing.

Coca-Cola’s claims for their “plantbottle”, marketed without a full life-cycle assessment, were misleading, and made recycling more difficult.

Unintentional greenwashing: It is even possible to greenwash without intending to. Even producers with a stated altruistic Higher Purpose, can make this mistake. They may believe in their Higher Purpose and truly want their products to be green and believe their products to be more environmentally friendly than they are. But this desire and belief has can keep people from having their products and claims tested scientifically or have them certified by a third party. At some point a sort of blindness, or confirmation bias, takes hold, which can convince them they don’t need proof.

Here is an example of a company apparently trying to make an improvement, by reducing the amount of plastic waste. However, they engaged in the same unsubstantiated claims and hidden trade-offs as intentional greenwashers: e.g. 74% of the packaging is made from “well-managed” trees, a “renewable resource,” but fail to mention the other 26% is made of petro-plastic, which is not renewable, and poses recycling challenges. Furthermore, the carbon footprint of transporting boxed water is high, when compared to transporting water via pipe. For the solution to this problems see Part 4 of this series, “Transparency”.

The Americans have a saying—which, unfortunately, they seem to ignore most of the time—“The road to Hell is paved with good intentions.” The damage to people and the planet, AND your brand, is the same wether greenwashing is intentional or not. And with unintentional greenwashing the damage to your brand can be even worse because the fervour of your good intentions can make your customers feel even more betrayed. If you are serving a higher purpose and are on the path to providing truly eco-products, then you have an even greater responsibility to do your homework.

More subtle reasons: Research, scientifically proving a claim, and third party verification can take time and money. And it is always possible your dream for your product may turn out to be not be as rosey as you had hoped. We humans have strong tendency to not want to know we have built a house upon sand. We do not like to find out we were wrong and therefore often avoid the steps required to find out if we are wrong, or even partially wrong.

Responsibility: Purpose alone is amoral. Good guys and bad guys alike can have a strong purpose. Therefore purpose without introspection, study, and deep awareness can lead to negative outcomes, for your brand, for the earth, and all humanity. You have to learn to constantly question your motivations. Having a higher purpose is truly a great responsibility.