Greenwashing: An Environmental Scam That’s Fooling the Public and the Planet

Greenwashing is a tool wielded by hypocritical companies, that allows them to cheat consumers, investors, and the environment. Greenwashing is an act/process of reporting a false image or misleading information about how environmentally friendly a company’s products are. It’s a vain attempt to trick the consumers and stakeholders into believing that the company engages in environmentally sound practices and respects the concerns of the public to avert the climate crisis.

In an era where the public and key investors look out for environment-responsive actions, firms are obliged to make green claims and introduce green practices to meet the expectations of the buyers and the shareholders. However, these claims may turn out to be exaggerated by using broad vague statements and generic parlance without any consequential proof. After all, the burden of being the climate leader and striving to become a net zero emitter is too much to bear. The true performance does not reflect the big claims made by the so-called sustainable and environment friendly companies. Trending phrases such as ‘net aero emissions’ and ‘carbon neutrality’ are often used by companies to reduce the visibility of their negative impacts rather than as action-oriented goals to tackle the climate crisis.

Greenwashing has been widely adopted by businesses to pull away the public’s attention from environmentally damaging practices. Companies greenwash their activities and products by not providing full information, using green logos and packaging as an attempt to seek the public’s approval for being eco-friendly, using vague descriptions and misleading advertisements and several other techniques.

The definition of greenwashing has evolved over time. It was coined in 1986 by environmentalist Jay Westervelt (Olsen & Potucek, 2013). Since then, the term has adorned a multifaceted nature, as additions and subtractions have been made to it to best fit specific cases. Terrachoice, an advertising consultancy, has provided an extensive list of ways through which companies greenwash their activities. Famously known as the ‘7 sins of greenwashing,’ it comprises the sin of hidden trade-off; the sin of no proof; the sin of vagueness; the sin of worshipping false labels; the sin of irrelevance; the sin of the lesser of two evils and lastly, the sin of fibbing (Moran, 2022).

To know about the sins in great detail, please click here.

Why do companies resort to greenwashing?

India’s rising status in the global index for being one of the most polluted countries has unlocked a new sense of awareness among the public and investors. Consumers are increasingly holding companies accountable for being socially responsible and are willing to pay high prices for the services that they perceive to be environmentally friendly. The public’s growing awareness of the environment has inevitably forced companies to window-dress their information about their environmental performance to create a positive corporate image. Greenwashing has in some way provided an easy route for companies to make big bucks from environmentally conscious consumers while maintaining an angelic image. Moreover, isn’t it convenient to deflect consumers’ attention away from major issues by going green? Yes, horribly so, companies often rely on greenwashing to divert unwanted attention from other major troubles they are neck-deep in. Not wanting to incur huge expenses to alter the operational processes to reduce harmful emissions, firms invest in green communication through advertisements and marketing to be perceived as eco-friendly and manipulate purchase intentions and brand perceptions to increase profits by manifolds. Companies choose to play with consumers’ sentiments by building false green images, dispensing vague information about the products, and misrepresenting green-financing numbers to environmentally woke investors.

Grasim VSF, the first Indian company to have been awarded a Gold level Material Health Certificate by C2CPII, USA (A commitment to sustainable living, 2023), claims its raw material to be fully sustainable, bio-degradable and eco-friendly. Though the fibres are claimed to be made from wood pulp, it is apparent that the organization is having trouble avoiding pollution through its unsustainable processes. According to the findings by Quantum Advisors India, one of its chemical premises was a source of damage to public health and, also contaminated the water. The Tungabhadra River, located near the factory, was found to be contaminated with anthropogenic constituents. The water quality had deteriorated to the point where it was deemed unfit for drinking.

The water of the river was a lifeline to the 27 villages that are nestled along its bank that provided clean drinking water, washing and bathing and other day-to-day needs. Now, the same water has become a source of agony, sickness and misery. Apparently, the factory used to discharge about 33,000 cubic metres of effluents daily into the river. Following the atrocity, Karnataka State Pollution Control Board (KSPCB) pointed out that the unit was operating without permission from the authorities under the Water and Air Act (Kanwalli, n.d). A case was filed in the High Court, but the corporate has managed to stay afloat and the unit continues to operate in the vicinity, while the villagers still yearn for justice. Many have been forced to switch occupations to sustain themselves financially, as they can no longer rely on the resources such as fish and clean water provided by the river to make a living.

Further, to make matters worse, the factory was found to be storing mercury on its premise. Given mercury is a naturally occurring substance and is part of nature itself, its contact with the environment and residents can lead to detrimental effects. This is a clear example of greenwashing, as the company claims to be sustainable at its core. This illustration helps us understand two types of greenwashing practices companies adopt. First, to cover the negative information about the product’s or activity’s performance by providing glossed-over information. Second, companies would rather spend more time marketing a green image of their brand than genuinely putting efforts to ensure that the products and operations are truly sustainable.

Another fine example of a company squandering pragmatic legitimacy (aligning self-interest with that of the interest of the consumers) (Netto, Sobral, Ribeiro, & Soares, 2020) is Unilever which set up a plant at the hill station Kodaikanal. The factory was found to be dumping toxic mercury on the land of this pristine hill station. In 2001, it was found in Kodaikanal’s Pambar Shola forest. As per the study conducted by the government, workers of the factory and residents were permanently affected due to exposure to mercury. The plant was shut down and the corporate fled without providing any compensation to the people. It was only after 15 years that the outcry from activists and the public made Unilever clean up the mess which it left behind. But, obviously, they did it half-heartedly (Singh, 2019) by paying ex-gratia payment (undisclosed) as part of the settlement to 591 of its ex-employees. The company continues to struggle to make the affected area free from mercury contamination. Navroz Mody, a localite, and other activists want the company to remove the affected soil and store it in a confined space (Chaitanya, 2021).

Nothing but awareness, transparency and accountability: The solution to greenwashing

Currently, there are no specific laws in India that monitor environmental claims made by organizations, and as a result, corporates like Grasim VSF and Unilever unabashedly make false and misleading assertions related to the sustainability of their products and processes. Corporations should go beyond profits and add more value to society by being environmentally proactive. How can we curb such a malicious practice? At present, public backlash has kept greenwashing somewhat under control. For instance, in the case of Grasim VSF, KSPCB has appointed a committee headed by Shobha Karjagi, President of Samaj Parivartana Samudaya. The committee consists of environmentalists, affected villagers and representatives of Harihar Polyfibres (HPF), another industrial unit located at the banks of the river. The efforts of the committee have not come to fruition. However, their unwavering and continuous efforts have shed a light on the shady practices of the factory. Even if no legal action has been taken so far, the factory now knows better than to not take the public for granted and that it must take responsibility for the negative externalities it has created. Hopefully, the report that the committee furnishes would relieve the villagers of their misery.

Nevertheless, we should not rely solely on this. We also need the government to implement strict regulations to eliminate them. A tripartite system (Krishnan, 2022) has been suggested which involves three parties: the government (a regulatory body), an organisation, and a third party consisting of NGOs, civil society and activists to keep a check on the activities of the companies. The collective opinion of the three parties will help the government incorporate the best measures leading to environment-friendly policies and a transition towards accountability. Furthermore, the system will provide a platform for stronger communication between the government and the citizens-on-ground. The system will additionally bring the corporates’ wrongdoings into the spotlight (Zhu, Niu, Zhao, & Li, 2022).

Specific metrics can also be introduced to coerce firms to reduce greenwashing. A dynamic channel of communication should be established between stakeholders comprising investors, buyers/users, and those impacted with the purpose of educating about the impact on the environment made by firms’ activities. One other way to prevent companies from reporting false reports regarding their environmental performance is to conduct surprise onsite inspections and charge heavy fines if they fail to meet the metrics which typically involve limited use of water, energy resources and electricity and reducing carbon emissions and other effluents that are designed to safeguard the environment. The loss of money will definitely deter the profit maximisers from taking advantage of people’s expectations and the lack of strict regulations in place.

Another important measure to combat greenwashing is to educate the masses about what it truly means to be environmentally friendly. They should be well informed to look beyond green labels and a few green words mentioned in the description of the product to be fully able to analyse the eco-friendliness of the contents of a product.

Towards a green and accountable future

Greenwashing can be a destructive tool, leading consumers to lose all faith in the green claims made by companies. This could set the country and the world many steps back in the fight against the climate crisis. Citizens’ optimism shattered by selfish interests and the nonchalance of the companies could thwart all the efforts made towards the improvement of the environment. In this regard, when consumer awareness and green consciousness are monumental to save the planet, companies indulging in greenwashing pose a great danger to these efforts. Poor performance reported by companies paint a bleak picture of the future that awaits us. Ardent monitoring of companies’ environmental performance, scrutinizing their every step, and coercing them to abandon practices that are detrimental to nature’s health should be measures to counteract harmful superficial actions by corporates towards turning greenwashing into green accountability.

Esha Agrawal, a Rethinking Economics India Network editorial team member, wrote this piece. She is seeking a master’s in economics with a specialisation in environmental economics at The Energy and Resource Institute, India (TERI).




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