Greenwashing isn’t when you use green soap, or when you water the garden grass on a hot summer's evening. Greenwashing is actually much more serious, and it’s the topic of this article, the next in our ESG series.
If you missed the earlier articles in our ESG series, you can find them here.
Like whitewashing - when a person or company glosses over a scandal to make themselves look better - greenwashing is when a company spends more time and money claiming to be eco-friendly through marketing and advertising efforts than they actually do implementing business practices that minimise their environmental impact.
The term was coined in the 1980s, and there have been a number of high profile scandals from BP to Walmart, to Chevron, to DuPont, to Ryanair and more. Companies can greenwash in a variety of different ways, like making and promoting sustainable home insulation, but producing it in a factory that pollutes rivers, or putting cosmetics in biodegradable packaging whilst testing their products on animals.
One of the biggest offenders is marketing embellishment. For example, using woolly terms like ‘green’ or ‘eco-friendly’ without backing it up, or products using green imagery, or claiming their company is an industry leader, when they’re only marginally better than their competitors who fail ESG ratings miserably.
Whilst some greenwashing is unintentional and comes from a lack of knowledge about what sustainability really is, it can be intentionally carried out through a wide range of marketing and PR efforts.
But whether intentional or not, greenwashing is ultimately misleading and misdirects well-intentioned consumers down a path they may see as green living, but is actually not. Greenwashing is also responsible for stunting the growth of further sustainable design or circular economy initiatives, a movement that aims to shift our economy from high waste to high-value goods and services.
Being seen to be ethical drives profit for many companies, fast fashion companies using ‘greener’ terms for certain clothing ranges, whilst paying garment workers minimally and being part of the landfill problem, with items arriving at our door wrapped in plastic or nestled inside un-recycled cardboard boxes. The same goes for companies that highlight that they are plastic-free, and instead use metal tins which arguably saves a lot of plastic ending up in landfill, but there are hidden environmental costs in shipping and distributing heavier tins.
As consumers, investors or analysts, scrutiny and research is key if we want to buy or invest in the ESG space. As we’ve highlighted in a previous article there are no standardised definitions when it comes to ESG, it’s all about personal choice and user-defined comfort levels.
The Upside app and ecosystem encourages investors to submit all the research they can on an idea through the comments and rationale options, allowing others in the ecosystem to learn more and comment back creating a feedback loop that enables all users to learn and grow as investors.
There’s an Upside to choice and a science to being right.