Green claims are everywhere – from product labels to marketing campaigns – but how can businesses avoid greenwashing and truly prove their environmental responsibility?
Greenwashing happens when companies make misleading or unsubstantiated claims about their environmental benefits or sustainability initiatives. Such practices wilfully create a false impression of sustainability that can mislead consumers – and is very likely to harm a company’s reputation when exposed.
But it’s not just the actions of the company itself that is likely to come under scrutiny. Claiming environmentally responsible operations can also demand supply chain transparency.
With growing concerns about climate change and increasing consumer demand for sustainable efforts, the stakes are higher than ever. Environmental groups and regulators alike are cracking down on unsubstantiated claims, while business leaders can face financial penalties and legal consequences for greenwashing allegations.
This guide offers practical tips to help your company navigate the risk of greenwashing, ensuring your sustainability initiatives and environmental practices build real trust – and competitive advantage – on your journey towards a sustainable future.
What Is Greenwashing?
Greenwashing is the practice of making unsubstantiated, misleading, or false claims about environmental benefits. For example, overstating renewable energy use, hiding trade-offs in the supply chain, or using vague language that leaves consumers guessing.
This practice can create a false sense of environmental responsibility, deceiving customers who want to support sustainable businesses but are instead met with unsubstantiated or false environmental claims.
As consumer awareness grows, so does scrutiny – from environmental group regulators, and watchdogs like theCompetition and Markets Authority (CMA), who are increasingly clamping down on misleading or exaggerated claims.
Avoiding greenwashing isn’t just about dodging legal consequences or financial penalties – it’s about building genuine trust and demonstrating real progress through your company’s sustainability efforts.
Why Avoiding Greenwashing Matters
Avoiding greenwashing isn’t just a box to tick; it’s vital for protecting your company’s reputation, ensuring compliance, and making a real environmental impact. Here’s why getting it right matters.
Consumers Are Watching
Today’s eco-friendly consumers are smarter and far more sceptical than ever before. They actively seek out companies with transparent sustainability efforts and can spot misleading or false claims easily.
According to PwC’s 2024 Voice of the Consumer Survey, consumers are willing to spend 9.7% more on eco-friendly products – but only if they trust the company’s environmental claims.
If your environmental or sustainability claims fall flat or feel exaggerated, you therefore risk losing not only your consumer’s trust and loyalty but also devastating damage to your brand if exposed publicly.
Regulators Are Tightening Rules
Environmental groups and regulatory bodies worldwide are stepping up to update consumer protection laws to crack down on companies accused of greenwashing. The UK’s Competition and Markets Authority (CMA) has introduced the Green Claims Code – six clear principles businesses must follow to avoid misleading claims.
In the US, the Federal Trade Commission (FTC) has increased enforcement against misleading environmental claims, including false carbon offsetting and unsubstantiated renewable energy use.
The European Union is also discussing the proposed Green Claims Directive, which aims to set common rules for how companies substantiate and communicate their environmental claims. Although this is still under negation, it signals a move toward stricter, harmonised standards across EU member states.
Financial penalties and legal consequences are real risks that no business can afford to ignore.
Your Brand’s Credibility Is On the Line
A company’s reputation is one of its most valuable assets. When businesses get accused of greenwashing, the fallout can be severe – from public backlash to lost contracts with financial institutions that prioritise sustainable business practices.
Just one high profile example is the Royal Bank of Canada in a case outlined by Risk Business. It states, “Publicly, RBC spends millions on greenwashed advertising, claiming support for Indigenous rights,” said Richard Brooks, Climate Finance Director at Stand.earth. “In reality, the bank is polluting our communities, bankrolling climate chaos and Indigenous rights violations to the tune of billions.”
In contrast, companies that demonstrate authentic sustainability efforts often gain a competitive advantage by empowering customers with credible environmental data and transparent reporting of initiatives.
It Stalls Genuine Impact
Greenwashing doesn’t just mislead customers – it stalls real progress on environmental issues.
When resources are poured into marketing false claims instead of meaningful sustainability initiatives, the company’s carbon footprint and overall environmental impact stay unchanged.
True sustainability means more than just avoiding greenwashing. It means committing to genuine, measurable improvements in environmental performance, from reducing carbon emissions to improving supply chain transparency.
How Can Businesses Avoid Greenwashing?
Navigating the fine line between promoting sustainability and avoiding misleading claims is key for any company committed to environmental responsibility.
Here are practical tips to help your business avoid greenwashing and build trust with consumers and regulators alike.
Be Specific & Transparent
Vague or broad sustainability claims can easily come across as overstated or falsified. Instead, be specific about your sustainability efforts.
For example, rather than saying ‘environmentally friendly products’, explain exactly what makes it eco-friendly, whether that be how your company reduces carbon emissions or uses renewable energy during production.
Transparency about your company’s sustainability efforts and environmental data empowers consumers and reduces the risks of accusations of greenwashing.
Use Independent Certifications
Independent certifications from credible environmental groups or third-party auditors add weight to your sustainability claims.
Certifications like B Corp, LEED, or FSC signal that your environmental practices have been verified by unbiased experts.
When evaluating certifiers, look for well-established organisations with transparent standards, a track record of enforcement, and recognition within the industry. Checking whether they are accredited by reputable oversight bodies can help further their credibility.
This transparency also shows that your company’s products and processes are environmentally sound and compliant with consumer protection laws.
Don’t Hide Trade-Offs
Product or service are rarely 100% and perfectly sustainable in every aspect. But you must avoid hiding trade-offs or glossing over less environmentally friendly aspects of your operations.
For example, if your carbon offsetting programme is part of your net zero strategy, clearly explain how it fits into your wider sustainability journey.
Honest reporting initiatives that include both progress and setbacks build credibility and demonstrate a genuine commitment to sustainable business practices.
Avoid Green Aesthetics Without Substance
Marketing teams love green visuals and eco-friendly language, but these can be misleading if not backed by real environmental benefits.
Align marketing messages with your company’s sustainability efforts to avoid creating a false impression.
Avoid overusing buzzwords like ‘carbon neutral’ or ‘environmentally responsible’ without clear evidence to back these claims, including ensuring supply chain transparency.
Align Marketing & Sustainability Teams
Silos between departments are a breeding ground for misleading eco-friendly claims that can deceive consumers.
For example, a Bank’s marketing department is likely to be keen on attracting high-value consumers who care about environmental issues. A card supplier might offer the Bank a card that appears to be made of wood to issue to those customers. Without proper scrutiny of the card and its greenwashing risk, the marketing team might unknowingly be offering a card that hides metal or plastic inside, resulting in the Bank making false sustainability claims.
In such circumstances, the Bank itself has become a victim of false environmental claims made by the card supplier. But it will be the Bank’s reputation that is most impacted as it will appear the Bank has set out to deceive consumers.
Marketing, sustainability, and compliance teams must work closely together to verify all green claims, including those based on products from within their own supply chains before going public. This strategic alignment helps maintain consistent and accurate messaging about their product’s environmental impact and the company’s efforts to protect their brand.
Report Progress (& Setbacks) Honestly
Consumers and regulators value honesty. Share your sustainability journey openly, including key milestones and areas needing further improvement.
Regularly publishing accurate environmental data and life cycle assessments helps validate your company’s efforts to uphold environmentally friendly practices. Don’t overlook the importance of supply chains and make sure they are environmentally responsible.
Educate Your Teams
The stakes are high when it comes to eco-friendly products. Social media is empowering consumers to share stories of greenwashing with a global audience.
Ensure your employees are trained on sustainable practices and the huge greenwashing risks.
Well-informed teams are better equipped to support your company’s environmental efforts and communicate sustainability claims responsibly across all channels.
Don’t Just Talk Green. Do Good Use Wood
It’s critical to really understand a product’s environmental impact, especially if you rely on it as a centrepiece for your own product or service.
TIMBERCARD by Copecto is a truly sustainable, payment card body made from pure, FSC-certified wooden layers that aligns your brand with authentic environmental responsibility and a sustainable future.
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