The term greenwashing wasn’t invented by the environmentally active Gen Z or even the older cohort of millenials. It dates back to 1986 when American environmentalist Jay Westerveld used it to describe hotels asking their customers to reuse towels to limit water usage while they abused neighbouring nature areas for their premises. Washing less towels than before? This cuts our budget. Leaving wilderness untouched? A wasted opportunity.
With Consumers aware of their environmental impact and investors keen to plough their money into sustainability linked funds, greenwashing is a new beast.
In order to fight this daunting modus operandi, the Competition and Markets Authority (CMA) published new guidelines earlier this month. It includes basic principles such as “claims about the sustainability of a product should be precise and shouldn’t be exaggerated”. Put bluntly, if 10 per cent of your toothbrush is made of bamboo, your toothbrush is not environmentally-friendly.
At the same time, the Advertising Standards Authority (ASA) promised a crackdown on misleading “green” ads, looking into claims made by the aviation and food industries among others, with an eye on how consumers interpret terms like “carbon-neutral”.
Critics (of which there are many) brand the guidelines too vague to make a difference.
Lee Shankland-Gort, head of social, sustainable and green finance at law firm Addleshaw Goddard is sceptical of their efficacy. According to him, there are problems with scope and detail – or lack thereof. While physical goods and financial services are often guilty of greenwashing, digital giants also make sweeping sustainability claims which rarely stack up.
Shanklard-Gort asked a fundamental question: if we haven’t figured out how to properly tax major global organisations, how are we supposed to regulate their environmental credentials? Google, Amazon, and the like can rest easy.
Greenwashing is also rife in the world of ESG. The metrics are “crying out for standardization”, says Steffan Williams, partner at Williams Nicolson. Companies play on this lack of regulation, so investors are becoming increasingly cynical.
For everyday greenwashing, you only have to stroll to your local high-street. The Changing Markets Foundation called greenwashing “this season’s hottest trend”, with H&M winning first prize. Of the fast fashion giant’s green claims, 96 per cent were found to be unsubstantiated or misleading. One egregious example was the H&M “conscious collection”. Pitched a sustainable line made from organic cotton, it was found to contain more damaging synthetic materials than the regular racks.
As always, enforcement is the deciding factor.
“You can create regulations that actually bite. Or you can say ‘Ladies and gentleman, please behave’. You can judge for yourself what the guidelines are probably closer to,” says Andreas Hoepner, of GreenWatch, a project which tries to weed out greenwashing with advanced algorithms.
On a world stage, British regulators are playing catchup. The European Union’s Sustainable Finance Disclosure Regulation (SFDR) has a stronger sting than the CMA’s, according to Hoepner. It obliges financial entities aiming to be top-tier ESG funds to abide by the 7 per cent year-on-year emissions cut agreed in the Paris Agreement.
Hoepner says the UK is at “stage one, when the EU Commission is at stage nine out of ten”.
For retailers, trust is the only real mechanism of enforcement. Because of this, independent shops have a harder time playing fast and loose with sustainability, says Andrew Goodacre, chief executive officer of the British Independent Retailers Association. “If you lose credibility in your community, the chances are you’re not gonna get it back,” he says.
But for multinationals, reputation damage doesn’t cut through. There is also a significant tension with manufacturers, who have their own margins to worry about it. It has become easy for retailers, detached from winding supply chains, to pass the buck. The CMA tries to solve this, warning retailers away from making “broad claims” about their products if they don’t know what’s happening down the line.
Ultimately, common sense checklists will do little to stem the tide of false claims. Guests at hotels have been convinced that reusing their towels would save the planet for decades. It helps us sleep at night feeling like we’ve done our bit. Unless there are factual benchmarks to measure transparency requirements from the people behind the levers, we’ll wind up with landfills packed full of “bamboo” toothbrushes.