The Everlution Blog is devoted to discussing issues related to the ever increasing ecological footprint of human beings. If we have the determination, we can reduce that footprint, even with more population and more affluence. We have the technology to overcome human-induced climate change - the biggest issue we have ever faced. But we have to get going as our species is irreversibly altering the climate that has been stable for the last 800,000 years.
This is a three-part series that discusses what greenwashing is, the rise of greenwashing claims, tips to avoid it and greenwashing put in the context of the new climate and sustainability related financial disclosure rules.
Part 1: The rise of greenwashing claims
Greenwashing describes environmental claims that are false or misleading. In Australia the ACCC considers a business will be engaging in greenwashing where it makes a claim that represents a product, service or the business itself as better for or less harmful to the environment than it really is.
Greenwashing presents a significant obstacle to tackling climate change. By misleading the public to believe that a company or other entity is doing more to protect the environment than it is, greenwashing promotes false solutions to the climate crisis that distract from and delay concrete and credible action.
Greenwashing claims abound around the globe. For instance, three UK retailers, Asda, Asos and Boohoo have been ordered to avoid making misleading claims about credentials of their clothes in the future. They will have to file regular reports to the UK’s Competition and Markets Authority (CMA) after an investigation started in 2022 examined concerns that the companies were using vague claims to bolster their environmental credentials.
Motorists concerned about the impact on the planet of petrol and diesel cars may be comforted by Esso’s marketing campaign on “thoughtful driving”. One of its most eye-catching initiatives is a proposal to trap carbon dioxide at a vast oil refinery and petrochemical complex on England’s south coast and store it under the seabed of the English Channel. The oil refinery at Fawley, a village in Hampshire, is operated by the US firm ExxonMobil, Esso’s parent company. The oil firm says the scheme will mean drivers can “fill up with less impact” and make “a major contribution to the UK’s move to net zero”.
But now the oil giant faces allegations of greenwashing as an investigation by open Democracy reveals that the project may never get off the drawing board. It hasn’t received a licence or government support, and the company has not committed any of its own money to build it. Paul Greenwood, Exxon’s UK boss, has said a 2030 target to complete a first phase of construction may be hit only “if you wave a magic wand”.
Meanwhile, the state of New York is suing the JBS Group, the world’s largest beef producer. The legal complaint notes that “the JBS Group has made sweeping representations to consumers about its commitment to reducing its greenhouse gas emissions, claiming that it will be ‘Net Zero by 2040.’” But those claims aren’t grounded in reality. The complaint goes on to argue, not only because JBS isn’t taking concrete steps toward those goals, but because as recently as September 2023, the CEO admitted in a public forum that the company didn’t even know how to calculate all of its emissions. It follows that what can’t be measured won’t be mitigated.
In Australia, throughout 2023 its corporate watchdog, the Australian Securities and Investments Commission (ASIC), launched three sets of greenwashing penalty proceedings in a shot across the bows of the financial services industry. The penalties that can be imposed in these matters run well into the millions. Although the Federal Court has not yet handed down judgment in any of these proceedings, the likely penalty in at least one case is rumoured to exceed $10 million.
Obviously, the potential for penalties of this magnitude can add significant financial and reputational costs to the price of marketing sustainability credentials over zealously. Any penalty serves as a deterrent to others tempting the same fate, which should motivate businesses to be alert to the greenwashing risk, even if not alarmed.
There’s also a federal Senate Inquiry into greenwashing underway, with a public hearing and a report on the Inquiry’s findings both due before the end of FY24.
In Part 2 of this series, we discuss tips to avoid greenwashing.
References
Australian Competition and Consumer Commission. (2023). ACCC ‘greenwashing’ internet sweep unearths widespread concerning claims. https://www.accc.gov.au/media-release/accc-greenwashing-internet-sweep-unearths-widespread-concerning-claims
Australian Competition and Consumer Commission. (2023). ASIC commences greenwashing case against Vanguard Investments Australia. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-196mr-asic-commences-greenwashing-case-against-vanguard-investments-australia/
Australian Competition and Consumer Commission. (2024). Environmental and Sustainability Claims. https://www.accc.gov.au/business/advertising-and-promotions/environmental-and-sustainability-claims
The Guardian. (2024). Asda, Asos, and Boohoo must avoid ‘greenwashing’ after crackdown. https://www.theguardian.com/business/2024/mar/27/asda-asos-and-boohoo-must-avoid-greenwashing-after-crackdown#:~:text=The%20three%20retailers%20will%20have,to%20bolster%20their%20environmental%20credentials.
The Guardian. (2024). ExxonMobil accused of ‘greenwashing’ over carbon capture plan it failed to invest in. https://www.theguardian.com/uk-news/2024/mar/31/exxonmobil-accused-of-greenwashing-over-carbon-capture-plan-it-failed-to-invest-in
The Guardian. (2024). New York is suing the world’s biggest meat company. It might be a tipping point for greenwashing. https://www.theguardian.com/environment/2024/apr/05/letitia-james-jbs-meat-lawsuit-greenwashing#:~:text=When%20the%20office%20of,beyond%20the%20world%20of%20food.
United Nations Climate Action. (2024). Greenwashing - the deceptive tactics behind environmental claims. https://www.un.org/en/climatechange/science/climate-issues/greenwashing