'Greenwashing,’ coined by environmentalist Jay Westerveld, is a term that has recently entered the lexicon. What does greenwashing actually mean? In simple words, it means making a product, policy, or practice appear to be more environmentally friendly or less environmentally damaging than it really is. It is a deceitful marketing gimmick used by companies to exaggerate their environmentally friendly action, intended to mislead consumers.
“Climate Misinformation” defines greenwashing the best - as a process of conveying a false impression or misleading information about how a company's products are environmentally sound. Greenwashing, therefore, presents a significant obstacle to tackling climate change. By misleading people to believe that a company or some other entity is doing more to protect the environment than it is actually doing, greenwashing promotes false solutions to the climate crisis.
The United Nations describes greenwashing as deceptive tactics behind environmental claims. Greenwashing, it says, manifests itself in several ways – some more obvious than others. The tactics include claiming to be on track to reduce a company’s polluting emissions to net zero when no credible plan is actually in place and being purposely vague or non-specific about a company’s operations or materials used.
It also includes application of intentionally misleading labels such as “green” or “eco-friendly,” which do not have standard definitions and can be easily misinterpreted, and emphasising a single environmental attribute while ignoring other impacts.
Role of United Nations in Tackling Greenwashing
Since the adoption of the Paris Agreement in 2015, an increasing number of companies have pledged themselves to reduce their greenhouse gas emissions to net zero - a level where any remaining emissions would be absorbed by forests, the ocean or other “carbon sinks.”
However, those claims are often based on questionable plans rather than actual emission cuts. The transparency and integrity of such claims, as such, remain critically low and create a failure to deliver urgent climate action.
In response to the rise in greenwashing in net-zero pledges, the UN Secretary-General established a High-Level Expert Group tasked with developing stronger and clearer standards for net-zero emissions pledges by companies, financial institutions, cities and regions, and speed up their implementation.
The expert panel, in its report titled ‘Integrity Matters’, outlined ten recommendations for credible, accountable net-zero pledges and detailed the necessary considerations for each stage towards achieving net zero and for addressing the climate crisis.
Following the report, UN Climate Change published a Recognition and Accountability Framework and Draft Implementation Plan to begin operationalising the expert group’s recommendations, improve transparency and maximise the credibility of climate action pledges, plans and transition progress.
To further accelerate action and hear from “first movers and doers,” the UN Secretary-General convened a Climate Ambition Summit at the UN Headquarters in New York in 2023, designed along three tracks - ambition, credibility and implementation, thus leaving “no room for back-sliders, greenwashers, blame-shifters or repackaging of announcements of previous years”.
In his thought-provoking address on the occasion of World Environment Day 2024, the UN Secretary-General called for a global ban on fossil fuel advertising and urged creative agencies to stop helping fossil fuel companies in greenwashing.
The term greenwashing was first used in 1986 by American environmentalist and researcher Jay Westerveld. Since then, it has been creating a furore in the sustainability strategies of corporate entities, which have often faced tremendous regulatory pressure to improve transparency and disclosure norms on their environmental performance and usage of environment-friendly products.
Quite often, there has been a mismatch between the oral claims and actual execution of sustainable practices, both at the firm level and at the product level. This might be associated with selective information disclosure about the product and service delivery.
The United Kingdom's Advertising Standards Authority (ASA) recently banned advertisements from various international air carriers, charged with accusations of greenwashing for allegedly misleading consumers by falsely claiming the sustainability of their flights and downplaying the environmental impact of air travel.
A renowned German car company was found to have been cheating in emissions testing of its supposedly green diesel vehicles, which was a case of greenwashing. Similarly, several other multinational corporations, including oil giants and soft drink majors have faced accusations of greenwashing.
Greenwashing can distort markets by creating an uneven playing field, where entities engaging in deceptive practices gain an unfair advantage over those honestly following genuine environmental standards. The absence of comprehensive regulations and standards for environmental claims allows greenwashing to flourish.
The practice of greenwashing poses a challenge to the integrity of carbon credit systems, particularly in informal markets, where the expansion of credit sources and certification by unofficial entities raises concerns about transparency and reliability. A carbon credit is equivalent to one metric ton of carbon dioxide or equivalent greenhouse gases removed from the atmosphere. The Kyoto Protocol introduced the concept of carbon credits and countries or firms that exceed emission reduction mandates are rewarded with carbon credits.
Certain important global initiatives related to greenwashing have been taken. At the 27th Conference of Parties (COP27), the United Nations Secretary-General declared zero tolerance for greenwashing, urging private corporations to rectify their practices.
Notably, the European Union approved the world's first green bond standards to combat greenwashing in October 2023. The "European Green Bond" label mandates transparency, directing 85 per cent of funds to EU sustainable activities. The legislation aims to support the EU's climate neutrality transition.
Laws in India Related to Greenwashing
Greenwashing is designated as an unfair trade practice under the Consumer Protection Act, 2019, in India. The Act prohibits any deceptive claim and outlines penalties and remedies for consumers adversely affected by these misleading practices.
The Securities and Exchange Board of India (SEBI) issued guidelines for issuers of green debt securities in February 2023 to ensure transparency & avoid greenwashing. The guidelines seek to protect investors, promote the development of the securities market, and regulate it.
The Advertising Standards Council of India (ASCI) plays a regulatory role in monitoring advertising practices and holds some jurisdiction over allegations of greenwashing. The ASCI, a voluntary self-regulatory organization, ensures that advertisements are legal, honest, and fair, safeguarding consumer interests and promoting fair competition.
Way Forward
For holding companies accountable for their environmental actions and inactions, consumers should demand that they disclose their environmental policies and practices, as well as their progress and challenges; and support green businesses and initiatives that have a proven track record of environmental performance and social responsibility. They should also implement comprehensive regulations and standards for environmental claims to ensure transparency and accountability.
