The big global greenwashing crackdown

15 November 2022 6 min. read

The ACCC recently announced a crackdown on greenwashing as part of its priorities for the coming year. As regulators scramble to tighten guidance and clamp down on breaches worldwide, Craig Pickup, Research Lead at Prological, weighs in on what this means for businesses seeking to avoid the greenwash trap.

Today, consumer behaviour is driven largely by choice: we have more options available to us, and easy access to information to decide which brands we will buy. Ultimately, we see products not only for their utility, but as a representation of our values, an extension of our core beliefs.

‘Conscious consumption’ is now more embedded than ever, with customers now considering environmental claims (such as supply chain, energy efficiency and production methods) as major factors when evaluating products to buy.

Craig Pickup, Research Lead, Prological

As such, these claims have become a powerful marketing tool, used by brands as a differentiator in the fight for customer loyalty and competitive advantage.

A global crackdown

Recently, the Australian Competition and Consumer Commission (ACCC) announced a crackdown on ‘greenwashing’, as part of its priorities for 2022 and 2023.  In particular, they plan to uncover misleading environmental and sustainability claims made by companies and bring action against them.

The ACCC considers greenwashing as misrepresenting the extent to which a product or strategy is environmentally friendly, sustainable or ethical.

An important aspect to note is that the ACCC isn’t scrutinising the breadth or depth of green activities, but the clarity, accuracy and disclosure of them.

Whilst some greenwashing is unintentional (usually from a lack of understanding about sustainability), it’s often done intentionally through targeted marketing and PR efforts, which, in the end, is a zero-sum game.

Economically speaking, it leaves companies worse off, as sales drop when customers realise they’ve been misled. Socially, it leaves communities worse off, as people remain uneducated about how their purchases affect the environment.

Assumptions and misconceptions

Historically, brands have leveraged the average person’s assumptions about what is environmentally friendly, rather than providing clarity and education together with their conscious claims.

For example, when considering a choice between glass or PET, most consumers would consider glass as being more environmentally friendly. However, when analysing the lifecycle of each, from mining material right through to final disposal, this is not the case.

When looking at the embodied carbon involved in manufacturing, cleaning, transporting glass, PET and even aluminium, PET is around twenty times less carbon intensive than glass (largely due to weight and transportation factors). Another common misconception is that materials can be infinitely recycled, which is not the case, and why lifecycle analysis is important for consumers to understand.

The drink packaged in two one litre PET bottles is the most sustainable option for most impacts, including the carbon footprint, while the drink in glass bottles is the worst option. However, reusing glass bottles three times would make the carbon footprint of the drink in glass bottles comparable to that in aluminium cans and 0.5 l PET bottles.

If recycling of PET bottles is increased to 60 %, the glass bottle would need to be reused 20 times to make their carbon footprints comparable.

Global warming potential of the carbonated drink

How to spot and stop it

Grandiose claims of sustainability have permeated almost every industry. The infamous case of car giant Volkswagen is just one example of intentional greenwashing which proved very damaging for the brand, when the company admitted to cheating emissions tests by installing vehicles with a ‘defeat’ device: technology used to detect when it was undergoing emissions testing (and altering the performance to reduce the emissions level), whilst marketing their vehicles as ‘low emissions’.

In truth, these engines were emitting up to forty times the acceptable limit for nitrogen oxide pollutants.

The fashion industry is one of the worst offenders, riddled with lack of transparency and unethical supply chains from mass produced ‘fast fashion’ to high-end labels alike. Despite investing in million-dollar marketing campaigns vowing to reduce their environmental footprint, many fashion brands rely on fossil fuel-based synthetic materials, heavy transport usage and unethical ‘sweatshop’ labour forces.

In a report released by the Changing Market’s Foundation, 59% of all green claims by European and UK fashion brands are misleading, despite 66% of consumers saying they would pay a premium for sustainable goods and services (and 73% when considering millennials alone).

From luxury items to everyday household products, customers are misled often in very simple ways. Products with green or neutral packaging are seen as more environmentally friendly than those with bright colours, and language on packaging with words like ‘earth’ ‘eco’ or ‘natural’ imply the product is better for the planet, when in fact it may not be at all.

It’s good to be (truthfully) green

Until recently, regulation for these marketing tactics remained opaque and at the production level, measuring carbon emissions is not as simple as one might think.

Scope (1) emissions are the direct greenhouse gas emissions released directly through the activity at a facility level; Scope (2) emissions are those which are released from the power station which generates the electricity for the facility and Scope (3) emissions are those which are generated both upstream and downstream from the company, and are beyond operational control of the company.

Whilst there are rigorous reporting standards for scope (1) and scope (2) emissions, scope (3) emissions are notoriously difficult to assess, because the data lies in the supply chain, rather than in the operations of a company.

What companies can control, however, is their messaging and marketing activities. Providing truthful and contextual claims, as well as credible evidence is crucial to maintain trust from their customers, in every industry and market.

Infinitely more crucial perhaps, is to address the way companies compromise the planet, for profit.

In today’s world, it’s not about the degree of effort companies make to improve their footprint, it’s the degree of transparency that matters most. Certainly, all honest efforts in reducing negative environmental impacts should be recognised and celebrated, but only when they are based in truth.