The Drivers, Effects, & the Extent of Greenwashing in the US

The Drivers, Effects, & the Extent of Greenwashing in the US

The Drivers, Effects, & the Extent of Greenwashing in the US

The Drivers, Effects, & the Extent of Greenwashing in the US

Ever since it was found out that some industrial activities cause environmental destruction, a lot of emphasis has been placed on greening efforts. Most consumers have learned that there is more value in going green, and it has even become fashionable to go green. However, the quest for more profits has not evaded the leading capitalists who have exploited the quest of consumers for green products and even brainwashed them into buying brown products, which is now involved in a concept called greenwashing. Even though most companies that promote green environmental campaigns can be seen as saints, they hide their greed for profits behind their campaigns and these are manifested in diverse forms of vices referred to as “greenwashing sins” and are largely considered as a major enemy to the environment. This paper seeks to find out more about the concept of greenwashing in the US, the key players involved, the reasons that fuel it, and how it impacts on the environment, as well as the ways or means through which this vice can be mitigated. The paper will focus on The Drivers, Effects, & the Extent of Greenwashing in the US.

The Extent of Going Green

The capital and consumer markets for green products and services have been growing throughout the 21st century. In 2009, it was estimated that the value for green products stood at $230 billion and this value was expected to rise to over $840 billion by 2015. The US has been on the forefront in making sure that environmental friendly products and services are offered, so that by the end of 2010 professionally managed assets that utilized socially responsible strategies were valued at $3.07 trillion. This value was an increase by 380% since 1995, and it was an indication of the world’s thirst for everything green.

This implies that there are some invaluable benefits that can be linked with going green, and many companies thus interpreted such benefits as an important source of revenue from increased sales. Despite the reason behind the greening campaign is connected to the environmental conservation initiatives, many companies have interpreted it as a tool for marketing their products and increasing their profits in the long run. In fact, the last two decades have witnessed an increase in cases of green advertisements and campaigns that are meant to strategically depict the organizations involved as more environmentally conscious.

The Meaning of Greenwashing

Greenwashing can be defined in two behavioral aspects of a firm, and these include positive communication of the performance of a firm with regard to environmental conservation, as well as poor performance in terms of environmental conservation. This implies that greenwashing is referred to as an act by companies of brainwashing consumers concerning the environmental benefits of their firm’s products, and even their environmental practices. This strategy is practiced both at firm and product level. In terms of firm level, the company may disguise itself as being involved in environmental protection measures on the surface, yet its internal activities are different hence betray it.

An example of this is the Green Electronics Company which has been on the forefront in promoting green policies through its “Ecomagination” campaign that was supposed to propagate the environmental conservation measures undertaken by the company. However, this company has at the same time been involved in the opposition of green activities, whereby it has lobbied to reduce the requirements of the EPA. At the product level, the company attaches an exaggerated green quality on a particular commodity and even gives it a label that indicates some certification of the green quality, only for the product to later be discovered as being below the said qualities.

For instance, the Energy Star Refrigerator from LG Electronics was accused of product level greenwashing when it had its mis-certification issues. The eco-label from Energy Star, which is a third party government-backed firm, indicated that the LG Electronics’ refrigerator had indeed met all the guidelines involving energy efficiency. Nevertheless, more than ten cases of LG refrigerators have been reported to be inefficient as far as energy consumption is concerned. In fact, these products were actually discovered to possess wrong energy specifications.

A firm practicing greenwashing often engages in two wrong codes of conduct at the same time. Firstly, it performs poorly in pertinent issues that affect environmental conservation, and secondly, it communicates poorly when sending messages concerning environmental conservation. A company can be categorized under the two positions, which is either brown or green. Brown is the absence of green initiatives, while green is linked more to the presence of environmental conservation initiatives. A company can thus be either brown or green and when the company is green, its public relations will be enhanced and thus there will be no issues that threaten its reputation. However, when the company is brown, it can be affected by either scenarios. On the one hand, the company can choose to be silent concerning its activities and let the public discover their problems on their own. On the other hand, the company can intentionally give the wrong information regarding its activities to cover up its mistakes.

Leading Greenwashed Product in the US

Airlines

Some airlines, like the EasyJet have come up with brazen claims to entice passengers and increase sales. One of the claims made was that traveling in an EasyJet plane is environmentally friendly in comparison to hybrid cars, yet these are unfounded. In addition, Airbus makers market themselves as environmental stewards, despite the fact that in 2005, it was projected that airlines like the British Airways produced more than 27 million tons of a mixture of emissions which include the greenhouse gases. Such an emission is environmentally threatening and among the inconvenient truths concerning the impacts of human activities on the environment.

Toys

Toys, a giant US toy maker, re-branded their toys with a letter ‘R’ to imply that they manufacture toys that are environmentally compliant. The company thereafter came up with a campaign to rally customers into buying toys in recycled plastic bags as part of its green efforts. However, this has not changed the fact that they use lead paint and cadmium, which are very toxic components, in the manufacturing their toys hence posing a health risk to children.

Soft Drinks

Although Coca Cola, the leading soft drink manufacturer, embarked on a “go green” campaign by producing stylish green colored cans, it still cannot justify the fact that Coca Cola is the leading consumer of water as far as conducting its industrial activities. The company requires about 2.5 litters of water to produce a liter of its products hence in a day, it produces about 1.5 billion cans of its goods and uses about 290 billion liters to produce its beverages on an annual basis. The same amount of water is equivalent to a fifth of the water that the US uses per day hence implying that the company is straining the world’s water resources.

The Seven Sins of Greenwashing

Sin of the Hidden Trade-Off

It has been asserted that a product is referred to as ‘green’ and this is determined by a narrow set of features without paying attention to other vital environmental issues. For example, paper cannot be automatically considered environmentally friendly simply because it originates from the forest that is harvested in a sustainable manner. This is because in the process of paper-making, there are many other aspects that affect the environment, which may include the use of chlorine to bleach paper and the greenhouse gases emitted in the manufacturing process.

Sin of No Proof

This is an environmental declaration that can neither be authenticated through easily available data to support it nor through a dependable third-party certification. General examples are products, like toilet paper and facial tissues which often claim several percentages of post-consumer reprocess content without providing backup evidence.

Sin of Vagueness

This is a claim that is defined in a very poor manner or one which is too broad in its real meaning, hence can be easily misunderstood by consumers. A good example is ‘all-natural’, products which should not be necessarily be used to refer to ‘green’ products or components. Arsenic, formaldehyde, uranium and mercury are products that occur naturally and yet are poisonous.

Sin of Worshiping False Labels

This product gives the impression of the endorsement of the third party in instances where such endorsements are non-existent. These impressions may be relayed through either images or words and this also covers all the fake labels on products.

Sin of Irrelevance

This is a non-helpful environmental declaration that can be straightforward, yet unhelpful or unimportant for the consumer seeking environmentally preferable products. A common example is ‘CFC-free,’ and this is quite popular even though CFC is banned through law.

Sin of Lesser or Two Evils

This is a claim that may appear to be true and beneficial within the category of a product, yet in actual sense it bears potential risks and destruction for those who consume or use it, and also affects the larger environment negatively. For instance, organic cigarettes can fall under the category of the sin in question, and the sport utility motor vehicle as well.

Sin of Fibbing

These are claims related to environmental conservation that are absolutely false. Common examples of such include the products that are labeled as or claimed to be Energy Star, registered or certified, yet in reality they are not.

Why Greenwashing Is a Problem

In today’s world, everything and anything seems to have gone ‘green’ including popular car companies, restaurants, airlines, and retailers as well as networks and stadiums. In many cases this poses a risk and disadvantage for unsuspecting consumers hence cannot be regarded as a good thing. Greenwashing is neither good for the environment nor for the consumers, and is ultimately worse for close enterprises.

Environment

At its worst level, greenwashing endangers the environment because it encourages consumers to go against what is good for the environment. Greenwashing can make claims that may be neither bad nor good for the atmosphere, yet most of its claims of going green are made with the aim of selling more products.

Consumers

Nobody enjoys or likes being taken for granted, especially with regard to money matters. Consumers are, therefore, advised to remain on the look out so as to make sure that they buy the exact products that they want.

Businesses

Many businesses have realized that in most cases favoring or even being seen to favor the environment can enhance profitability. This opens many ways for businesses to work towards reducing the environmental impact during their operations, and also enhance the quality of products and services.

Drivers of Greenwash Activities

Brown firms are forced to come off as green because of different factors, and the first one is to do with the non-market external drivers. Non-market external drivers are the monitoring and regulatory instruments or organs, which are sometimes complacent and relaxed in executing their duties. In the US, there are limited regulations concerning greenwash, and thus, many businesses have taken the advantage of the inactivity and lack of adequate regulations to engage in greenwash activities. The Federal Trade Commission (FTC), which is the organ concerned, evokes section 5 of the FTC Act as the main grounds for fighting greenwash activities.

This act prohibits firms from engaging in deceptive advertisements, and thus forbids any greenwashing activity. Nevertheless, there has been laxity in enforcing FTC Act and this is evident from the statistics which reveal that between 1990 and 2000, no cases of greenwashing activities were brought to the attention of FTC despite the fact there were many cases of the vice. Between 2000 and 2009, only five cases were reported and this implies that there are no serious measures to scare and thus eradicate the greenwashing activities.

External market drivers, can also fuel greenwashing activities and these may include the investors, consumers, and incentives induced by competitors. Brown firms operate in an environment where there exists too much pressure from investors, consumers, and competitors which forces them to perform at similar levels as the green firms. As a result, they disguise their activities in green to deceive the external market drivers that they are at par with their green counterparts. In addition, there are also organizational level drivers, which can cause firms to greenwash and these include ethical climate, intra-firm communication effectiveness, organizational inertia, as well as the characteristics of a firm, such as size, profitability and resources.

Organizational based factors largely influence how a firm may respond to external forces and hence determine whether or not it will engage in greenwashing activities. For instance, a firm with little or no capacity to control its ethical climate, can easily yield to the pressure to greenwash in an effort to satisfy the demands of investors and clients. Persons of authority, especially the leaders of an organization, can also lead a firm to engage in greenwash behavior. The behavioral decisions, the psychology of the leader, and many other factors come together to form tendencies, such as narrow decision making which ultimately affect the position of the firm with regards to greenwash activities.

How to Fight Greenwash Activities

There are various means through which stakeholders in business, government, and environmental sectors can aid in the fight against greenwashing, and the first one entails enhancing transparency in firms’ environmental performance. Companies that engage in greenwash activities conceal information concerning their environmental performance, and this makes it difficult for any affected person to raise a claim against their activities. To enhance transparency, the policy makers should ascertain that they enforce legal clauses, compelling firms to disclose pertinent information about their environmental activities.

In the US, the Right-to-Know Act that came into existence in 1986 forces firms to release information regarding its environmental performance. However, this act is only implemented at the federal level, and hence, the urgent need for state governments to enact similar policies at local levels to enhance effectiveness. Nongovernmental organizations are better placed to act as whistle blowers on cases that are concerned with greenwashing. However, this can only be done if these organizations work within an environment of open disclosure.

The promotion of voluntary disclosure of organizations’ environmental performance is another means through which greenwash activities can be fought. This can be focused on areas where there is lack of laws that advocate for mandatory disclosure of the environmental metrics of a firm. Voluntary disclosure can be enhanced through promotion of nongovernmental ecolabels on diverse products and companies. If the NGOs emerge strongly with ecolabels, companies can be motivated to voluntarily disclose environmental metrics information in order to get such labels.

Offering ethical leadership training to employees and key players in the industry can help to avert cases of greenwashing. To enhance such activities, managers should take the front line and enforce or implement courses and training on ethics for all employees. At the same time, managers need to develop ethical codes and train employees so as to reduce the unethical cases. Furthermore, managers and other players should streamline and improve all information that concern communication of environmental decision. In this case, there will be more centralization of decisions that are concerned with environmental communication, thereby resulting in reduction of greenwashing cases.

Conclusion

This paper has established that going green has so far become fashionable and profitable in the longer term. Nonetheless, going green is not only expensive but may also impact negatively on the profitability of majority of the organizations. At the same time, competitors, customers, and shareholders have increased pressure on companies to attain green benefits. Consequently, most enterprises have decided to take a shortcut through greenwashing activities with the results being witnessed in seven sins, including the sin of the hidden trade-off, the sin of no proof, the sin of vagueness, the sin of worshiping false labels, the sin of irrelevance, the sin of lesser or two evils, and, finally, the sin of fibbing. Some leading enterprises such as EasyJet and Coca Cola are among those seen to engage in greenwashing. This paper has therefore established the dangers of greenwashing to the environment, consumers, and even the business, and also given recommendations for various measures to mitigate the problem.

Bibliography

Business Pundit. “The Top 25 Greenwashed Products in America.” Business Pundit.com. 2010. http://www.businesspundit.com/the-top-25-greenwashed-products-in-america/ (accessed Oct 19, 2013).

Delmas, Magali, and Vanessa Cuerel Burbano. “The Drivers Of Greenwashing.” California Management Review 1, no. 1 (2011): 1-38.

Terra Choice Group . The Seven Sins of Greenwashing: Environmental Claims in Consumer Markets. Summary Report, New York: Terra Choice Group Inc, 2009.

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