The conversation around greenwashing is evolving. While originally concerned with deliberate acts of deceiving the public on matters related to a firm’s sustainability claims and commitments, greenwashing now includes non-deliberate acts such as exaggerated language and misleading imagery. Being able to spot these more subtle signs of greenwashing has become an imperative.

As the business value of ESG has grown, with a growing number of companies publicly committing to sustainability targets, so too have the risks around greenwashing. Sensitivities are high, and those found to be afoul of their commitments can face serious reputational and commercial damage.

Greenwashing incidents deteriorate trust between a company and their stakeholders, as well as reduce brand equity. As the momentum around sustainability continues to accelerate, the reputational impact of greenwashing will only grow.

Additionally, consumers are increasingly prioritising sustainability in their purchase decisions, which means greenwashing will be increasingly disadvantageous from a financial perspective. Sales and market share may be lost if care isn’t taken to communicate authentically about sustainability.

Firms must therefore ensure that any sustainability claims are backed up by a thorough due diligence, as well as that their communications about their activities are accurate and honest.

How greenwashing happens

Given this, it’s timely to consider how greenwashing incidents happen. Where do they arise? How can they be prevented? Besides well-known instances of deliberately deceiving the public, companies also need to understand that there are vulnerabilities even when they are otherwise fully committed to living their sustainability commitments.

IKEA, a firm with strong ESG credentials, is a case in point. In 2021, the company was accused of using illegal timber in their furniture, despite claims that it was coming from sustainable sources. The issue was IKEA wasn’t aware that the wood was illegal, given the supplier in question had been certified by the Forest Stewardship Council, an international NGO providing a green labeling system for wood products. This shows that even good faith claims can have damaging implications if greenwashing risks aren’t properly vetted.

Below are key areas to consider when looking for signs of greenwashing:

• Overlooking supply chains and third parties – Before making sustainability-related claims, companies should investigate their supply chains and third-party partners to identify greenwashing risks – for, ultimately, the company will be responsible for any violations.

• Exaggerated communications – Companies should avoid describing sustainable activities in high-sounding or idealistic language as well as using flowery or generic imagery to depict their efforts. This can result in exaggerated claims and leave them at risk of greenwashing accusations.

• Insufficient communications – Similarly, companies communicating too little about their sustainability efforts may result in a negative public perception that not enough is being done or that the firm has something to hide.

• Ambitions without a plan – All sustainability goals should be backed up with targets and a plan to achieve them. Firms should be able to communicate these plans to stakeholders and track against progress over time.

• Claims without evidence – Sustainability communications should be anchored around verifiable claims. Undefined or unspecific claims can leave a firm open to greenwashing, so it’s best to back them up with reliable data or third-party certifications.

We hope you found this article on the signs of greenwashing helpful. Paradigm can assist you with your sustainability-led communications. Stay tuned for a practical guide on avoiding greenwashing and contact us to continue the conversation.