These companies are proof that you can’t just make baloney claims about being environmentally-sound and get away with it—you’ve got to walk the talk.
The United Nation’s 26th Climate Conference, “COP26”, came to a close on November 12, 2021. The UN, itself, wasn’t fully pleased with the outcome. Besides weak commitments made by countries within, the conference also witnessed protestors opposing “greenwashing” and demanding “system change, not climate change” outside.
So, what is greenwashing?
Coined in the 1980s, “greenwashing” is a term referring to companies claiming to be eco-conscious—so as to impress buyers—but not really being so. For instance, if a company claims to sell sustainable clothes but, in reality, uses fabrics combined with synthetic materials, they are greenwashing you. As per a review, four in ten websites promote products and services in a misleading way. Campaign Manager at Changing Markets Foundation, Urska Trunk, details, “While brands are quick to capitalize on consumer concern by using sustainability as a marketing ploy, the vast majority of such claims are all style and no substance.”
What’s more? Greenwashing is not stopping anytime soon. According to the Managing Director of the Monetary Authority of Singapore, Ravi Menon, as funds for sustainability projects rise, greenwashing will, too.
What companies are accused of greenwashing?
Our rundown of five companies that have been called out for greenwashing.
When this fast fashion brand declared that it was launching a sustainable clothing line—the “Conscious Collection”—consumers were skeptical. For good reason, too. A June 2021 report by Changing Markets Foundation found that nearly 60% of the claims made by H&M were “unsubstantiated or misleading” to consumers. Of the 50 brands the foundation reviewed, H&M came out on top as the worst offender with 96% false claims. The report notes, “H&M’s Conscious Collection not only uses more synthetics than in its main collection, but also one in five items analyzed were found to be made from 100% fossil-fuel derived synthetic materials.”
Climate Activist Tolmeia Gregory, who protested the brand’s greenwashing display in a store, said, “You will never be sustainable for as long as your business model is based on fast fashion and profits. It doesn’t matter how many organic t-shirts you make.”
In 2015, Volkswagen (VW) was caught for cheating consumers with its supposedly “clean diesel” engines. The carmaker’s engineers had fitted 11 million cars with software that duped emission tests into believing that the car was eco-friendly. In reality, the cars were releasing up to 40 times the permitted amount of nitrogen oxide pollutants. In response to this, the then Chief Executive Officer of the company, Michael Horn, said, “We’ve totally screwed up.” And while we are all for self-awareness, it is best when followed with action. For VW, that has meant getting a climate activist on board, for starters.
Greenwashing doesn’t necessarily need to entail the products or services of the company. Marketing strategies could just as easily be the culprit, as was the case with ExxonMobil. Through its adverts, the natural gas company tried to convince people that its solutions don’t contribute to global warming. They claimed that their investments could cut their emissions in half.
As per Harvard University Professor, Naomi Oreskes, that’s hooey. She noted, “The reality of their business model is to continue to exploit, develop and sell oil and gas. But their advertising, their communications, make it seem as if they’re these great guys committed to sustainability and renewable energy.” Though the company claims that its algae biofuels could reduce emissions, it has no real net-zero target for the company. Impactful sustainable behavior is all about walking the talk.
“We are committed to finding improved solutions to reduce, reuse and recycle. Our ambition is to achieve 100% recyclable or reusable packaging by 2025”, Nestlé CEO Mark Schneider said in a press release. But, is ambition enough? Well, not without action. Greenpeace, an independent global campaigning network that exposes environmental problems, called Nestlé out for its “greenwashing” attempt. The corporation frowned upon the food company’s lack of an actionable agenda. Greenpeace said, “Nestlé’s statement on plastic packaging includes more of the same greenwashing baby steps to tackle a crisis it helped create. It will not actually move the needle toward the reduction of single-use plastics in a meaningful way, and sets an incredibly low standard as the largest food and beverage company in the world.”
Affordable, minimalistic and long-lasting—IKEA’s business model has been a consumer-favorite for years. Until recently, when the world’s biggest furniture retailer came under fire for greenwashing. An Earthsight report, aptly titled “IKEA’s House of Horrors”, revealed that the retailer has been selling furniture made from illegally-procured wood for quite some time now. This wood comes from trees in protected regions of Russia and represents the problem of corruption in the country.
According to Earthsight, shoppers around the world have been buying IKEA products made with this illegal wood every two minutes. What’s more? The company’s top management doesn’t see this as a problem demanding their immediate attention. In a recent interview, the Chief Executive Officer of IKEA, Jesper Brodin, declared, “I’m of the strong opinion that greenwashing is less dangerous than silence.” To that we say, it’s better to be silent than lie to and endanger shoppers, the environment and, potentially, yourself.
How are startups providing a solution to greenwashing?
Measuring the carbon footprint of a product or service can be challenging. After all, it involves complex carbon accounting. To simplify that process, FinTech startups are stepping up to the challenge. Normative, a Swedish startup backed by Google, designed a platform to assist companies in accurately gauging their environmental impact. The company’s CEO and co-founder, Kristian Ronn, expounds, “Businesses are the big polluters. They are responsible for two thirds of the total emissions. So they need to account for the footprint and mitigate that footprint, because essentially what gets measured gets managed.”
As per PitchBook, a capital market company, investment in carbon tech—with carbon accounting as its most popular segment—rose to US$670 million, doubling from last year. So if you want to launch a startup to earn profits while combating greenwashing, now is the time.
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