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Washed Over By Greenwashing




By Soh Yi Fei Titus


Introduction

As the world shifts its focus towards the exigencies of sustainability and environmental preservation, companies are increasingly rebranding themselves as champions of the environment to capitalise on the growing demand for environmentally friendly products [1]. However, this corporate trend is not without its detriments. For example, companies may resort to unsubstantiated claims to deceive consumers regarding the positive environmental impact of their products or emphasise the sustainability of some practices to overshadow other environmentally damaging practices. This phenomenon of conveying misleading information regarding the environmental positivity of a company’s products has been termed “greenwashing”.

United Kingdom

The United Kingdom’s Competition & Markets Authority (“CMA”) has been examining potential greenwashing across the various industries in the country. For example, the publication of the Green Claims Code in 2021 aimed to help businesses “understand how to communicate their green credentials while reducing the risk of misleading shoppers” [2]. The code was published following the CMA’s investigation into the impact of green marketing campaigns in 2020, which revealed 40% of green claims made online to be misleading [3]. Moreover, in 2022, the CMA began taking action against large fashion brands like ASOS, Boohoo and George at Asda [4].

Aside from the fashion industry, the CMA has also recently begun investigating sustainability claims in “fast-moving consumer goods” (essential items purchased on a regular basis) [5]. Specific practices highlighted for concern include unsubstantiated sustainability claims, misleading claims, and incorrect product range branding. Greenwashing risks are especially significant since a large number of goods in this category are marketed as sustainable. Consequently, many consumers may be misled into paying a premium without fulfilling their intent of contributing to an environmental cause – an alarming possibility exacerbated by the increasing costs of living in the UK.


Another watchdog deployed to combat greenwashing in the United Kingdom is the Advertising Standards Authority (ASA). For instance, the ASA recently forced Tesco to remove a series of television, radio, online and press advertisements, having discovered that Tesco’s claims that its plant protein-based foods were more environmentally friendly than their meat equivalents were unsubstantiated [6]. However, what was especially concerning was Tesco’s reliance on general evidence (that meat-based diets are more environmentally detrimental than plant-based diets) to defend their claims. This suggests the alarming possibility of companies being unaware of their own greenwashing practices or being insufficiently diligent in ensuring the sustainability of their practices. Like Tesco, companies may rely on general knowledge to substantiate their claims, misleading even themselves into believing their practices to be more sustainable. Consequently, it is unsurprising that ASA’s regulations specifically state that any advertisement lacking “robust evidence” is “likely to be misleading” [7].

European Union

The EU is also playing an active role in fighting greenwashing, as seen in a draft legal proposal by the European Commission in January 2023 [8]. The draft aims to stamp out the “vague, misleading or unfounded information” associated with the environmental characteristics of most products (53%) following an investigation in 2020. As such, environmental claims made by companies are required to be tested against science-based methodology which can effectively track environmental impact. The proposal also calls for greater transparency, requiring green claims which impact other areas or rely on carbon credits to offset their harm to disclose information regarding their environmental damage.

However, the European Union’s fight against greenwashing may conflict with its proposed carbon removal certification rules. In the latest iteration of these rules, operators of carbon schemes are allowed to register carbon which is taken and stored deep underground as carbon removals [9]. Critically, these regulations are vague and unclear, failing to define what exactly constitutes a “permanent removal” of carbon for instance. This has occurred despite a coalition of environmental organisations writing a letter to the European Commission calling for explicit differentiation between short-term and permanent carbon storage [9]. This failure to properly define and differentiate between the different types of carbon storage could cause inaccurate carbon removal certifications to be conferred on companies, increasing the risk of greenwashing. For example, companies which lack permanent carbon removal practices may be conferred certifications which state the opposite. Thus, these companies may exploit these certifications to substantiate their sustainability claims, promoting greenwashing.

Conclusion

Despite the efforts of developed nations to reduce reliance on fossil fuels and develop cleaner energy sources, the rise in global temperatures is increasingly unlikely to stay below the agreed level of 2 degrees set out in the Paris Climate Agreement [11]. As such, it remains paramount for governments and regulators to crack down on private companies and corporations in whatever way they can. However, given greenwashing’s origins in the 1960s hospitality industry [12], a pertinent question for thought is why the advent of combatting greenwashing has only just begun. While it is true that stopping greenwashing is better late than never with the profligacy of human activities and its’ resultant environmental harm since greenwashing’s inception is put into perspective, societal efforts today may seem a day late and a dollar short.





References

[1] Adam Hayes, “What is Greenwashing? How It Works, Examples, and Statistics”, (Investopedia, 08 November 2022)

[2] Competition and Markets Authority “Greenwashing: CMA puts businesses on notice” (Gov.UK, 20 September 2021) https://www.gov.uk/government/news/greenwashing-cma-puts-businesses-on-notice (Accessed: 16 February 2023)

[3] Competition and Markets Authority “ASOS, Boohoo and Asda investigated over fashion ‘green’ claims” (Gov.UK, 29 July 2022)

[4] Competition and Markets Authority “CMA to examine if ‘eco-friendly’ claims are misleading” (Gov.UK, 02 November 2020) https://www.gov.uk/government/news/cma-to-examine-if-eco-friendly-claims-are-misleading (Accessed: 16 February 2023)

[5] Judith Evans, “UK food and toiletries face scrutiny over ‘green’ claims”, (Financial Times, 26 January 2023) https://www.ft.com/content/96b0125d-6a93-46ba-aee8-ac5ed83eea95 (Accessed: 16 February 2023)

[6] Judith Evans, “Tesco rebuked over greenwashing in adverts for plant-based food”, (Financial Times, 8 June 2022) https://www.ft.com/content/262012c0-9781-4d02-82af-bf575d9a8c6d (Accessed: 16 February 2023)

[7] Judith Evans, “Tesco rebuked over greenwashing in adverts for plant-based food”, (Financial Times, 8 June 2022) https://www.ft.com/content/262012c0-9781-4d02-82af-bf575d9a8c6d (Accessed: 16 February 2023)

[8] Kate Abnett, “EU plans law forcing companies to prove green claims are real – draft” (Reuters, 13 January 2023) https://www.reuters.com/business/sustainable-business/eu-plans-law-forcing-companies-prove-green-claims-are-real-draft-2023-01-13/ (Accessed: 16 February 2023)

[9] Alice Hancock, “EU’s proposed carbon removal rules open to greenwashing, say experts” (Financial Time, 28 November 2022) https://www.ft.com/content/c3ab4d6d-a7af-4462-8616-a8a47cf69e51 (Accessed: 16 February 2023)

[10] Alice Hancock, “EU’s proposed carbon removal rules open to greenwashing, say experts” (Financial Time, 28 November 2022) https://www.ft.com/content/c3ab4d6d-a7af-4462-8616-a8a47cf69e51 (Accessed: 16 February 2023)

[11] Alice Hancock, “EU’s proposed carbon removal rules open to greenwashing, say experts” (Financial Time, 28 November 2022) https://www.ft.com/content/c3ab4d6d-a7af-4462-8616-a8a47cf69e51 (Accessed: 16 February 2023)

[12] Adam Hayes, “What is Greenwashing? How It Works, Examples, and Statistics”, (Investopedia, 08 November 2022)



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