What is Greenwashing?
The success of companies is closely related to how many customers they attract. Many companies are trying to change their management style to be eco-friendly in order to win customers’ favor. This is because there are a lot of customers who consider environmental impact when purchasing products and using services compared to the past. For this reason, many companies adopt environmental management methods to be chosen by customers. However, what if, contrary to what they claim, they continue to engage in environmental pollution in a way that customers cannot see?
In fact, some companies emphasize sustainability as a marketing strategy to promote their products or services, but in reality, they continue to cause to environmental pollution. These practices are called “greenwashing.” These practices not only undermine the efforts of companies that actually try to help protect the environment through eco-friendly management but also cause confusion in consumers’ eco-friendly purchasing decisions. In addition, it is a deceptive act that destroys customers’ trust in eco-friendly brands.
Why do companies commit greenwashing?
The reason why companies commit greenwashing is simple: Corporate ethical activities improve the brand value of the company, which is linked to corporate profitability. McKinsey conducted a survey in cooperation with Box1824, an institution that investigates consumption trends. As a result, it was found that Generation Z people tend to prefer products from ethical companies and are much more likely to spend money on them (Francis and Hoefel, 2018). For this reason, companies desire to appeal to society, or at least appear so, by being conscious of environmental problems.
Another reason is that some companies do greenwashing unwittingly. Although they try to pursue eco-friendly activities, in reality, they harm the environment. The cause of this situation is a lack of expertise. Many companies do not have expertise in what is beneficial or harmful to the environment. For this reason, what companies consider to be environmentally beneficial activities in the process of corporate activities is not actually the case. For example, an Australian company changed to using biodegradable plastic and used this change as a marketing factor. However, it did not decompose completely, as some of its materials could not decompose without meeting the decomposition conditions. Australia’s consumer watchdog ordered the suspension of sales and fined the company because its activities qualified as greenwashing.
If a company’s eco-friendly activities are carried out correctly, the company’s efforts can help profits. But intentionally or not, if considered greenwashing, it could eventually lead to internal damage to the company. Employees’ trust in the company can be lost if they witness their employer commit greenwashing, giving false information to consumers, causing them to make the wrong choice. It can lead to a decline in corporate productivity, a decline in employee morale, and a high turnover rate. In addition, not only the trust of corporate customers but also market share can be lost to competitors, destroying the trust of stakeholders. To avoid such an accident, there are efforts to prevent greenwashing.
Efforts to prevent greenwashing
Companies should be aware of the following factors in order to avoid greenwashing and properly advertise the sustainability of their products or services.
- A company must organize its claims clearly. For example, when describing a product’s composition, it should be clearly stated that “this product contains 70g of such material,” not “this product contains such material.”
- It is very important to allow customers to see data that can support the company’s sustainability. They must keep updating their data. Data that supports a company’s claims can be certified by a trusted third-party organization to further improve data reliability.
- Companies need to reorganize business operations. If companies want to produce green products and use this process as a marketing strategy, they need to put sustainability into the way the business operates. Companies should adopt sustainable approaches at the stage of waste disposal, manufacturing, and distribution.
- Transparency should be maintained in corporate sustainability practices and plans. How eco-friendly the product is and the transparent operation of the company’s production and distribution processes are two of the main steps to avoiding greenwashing. They need to show consumers how they operate based on sustainability through transparent operational policies.
Conclusion
Marketing is a very important factor for business operations. Marketing is the biggest bridge that connects customers and companies. Usually, customers decide to purchase products or services that meet consumer needs by contacting them through corporate marketing. For this reason, companies should approach marketing with integrity. In other words, transparency must be guaranteed. If they want to claim that their products are sustainable or eco-friendly, they should support that claim with honest evidence. It is important for companies to conduct meaningful research on sustainable methods and apply them to all stages of operations as well as to what consumers see.
References
Robinson, D. (2021). Greenwashing: What is it, Why is it a Problem, and How to Avoid It. [online] Earth.org – Past | Present | Future. Available at: https://earth.org/what-is-greenwashing/ [Accessed 27 August 2022].
Francis, T. and Hoefel, F. (2018). ‘True Gen’: Generation Z and its implications for companies. [online] McKinsey & Company. Available at: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/true-gen-generation-z-and-its-implications-for-companies [Accessed 27 August 2022].
Edwards, C. (2020). What Is Greenwashing? [online] Business News Daily. Available at: https://www.businessnewsdaily.com/10946-greenwashing.html [Accessed 27 August 2022].
Yonkers, C. (2021). What is greenwashing? How to spot and avoid it. [online] www.sustain.life. Available at: https://www.sustain.life/blog/what-is-greenwashing [Accessed 28 August 2022].
