How to avoid greenwashing in business?

The term "greenwashing" – the practice by which companies try to create a false impression about the sustainability of their activities or products – is increasingly being used in the public domain. This approach not only undermines consumer confidence but can also lead to legal consequences and the loss of reputation. With the growth of global environmental challenges and increasing consumer demand for sustainable solutions, companies need to find ways of communicating their sustainability initiatives in an honest and transparent way. But how to avoid greenwashing? The experts of Elektrum Energy Efficiency Centre share practical tips on how to avoid falling into the trap of greenwashing and build trusting relationships with customers and society.

Greenwashing manifests in many forms in an attempt to create the illusion that a company or product has a positive impact on the environment. Consumer misinformation is sometimes deliberate, and sometimes it occurs due to insufficient information or inaccurate wording.

The most common forms of greenwashing:

• Non-specific slogans, terms like "eco-friendly", "environmentally friendly", "organic", etc., that are used without specific evidence and facts.
• Visual design – the use of colours and symbols that give the impression of a sustainable product while it may in fact be harmful to the environment.
• Selective highlighting of information can mislead consumers regarding the true environmental impact of a product. For instance, if a product contains 20% recycled materials, it should not be claimed that it is made entirely from recycled materials.
• Symbols and illustrations that provide insufficient information.
• False eco-labels and certificates – companies sometimes create their own “certificates” that have not been independently verified and recognised.
• A mismatch between the words of the company (in marketing communication, reports or public statements) and deeds. For instance, if a company claims to be "carbon neutral", it must be able to provide an independent third-party certificate or a detailed report on carbon emission measurements and carbon offsetting.

How to avoid greenwashing?

Companies need to respect a number of principles to operate as sustainably as possible and build trust:

• Perform fact checking – before publishing information about your company or a product, make sure that all the claims are backed up by facts and relevant evidence. Any environmental claim must be supported by clear, preferably independent and scientific evidence.
• Ensure transparency of information – it is advisable to publish realistic and transparent information about the environmental impact of your products or services. Concealing information or placing it in places where consumers are unlikely to notice it may be considered misleading conduct.
• Avoid overly general and unsubstantiated claims – environmental claims need to be made in plain and understandable language, avoiding technical jargon that could mislead or confuse consumers. Terms such as "environmentally friendly", "green" and others can be misleading if they are not based on specific facts and are used without further explanation.
• Educate employees and customers – sustainability is an ongoing process; therefore, it is important for employees to be aware of the sustainability strategy and practices of the company and, consequently, be able to provide true and accurate information to customers. It is also important to educate consumers on the issues of sustainability to enable them to make informed decisions.

To build consumer trust and ensure transparent sustainability communication, it is essential for companies to avoid greenwashing and base their environmental claims on verifiable facts. In this context, the Green Claims Directive, which is a proposed European Union law aimed at preventing greenwashing or misleading claims about the environmental impact of products and services – will play an important role. The Directive will require companies to ensure that any environmental claims, such as “environmentally friendly” or “carbon neutral”, are scientifically substantiated and verifiable. It is therefore essential to adapt our sustainability communication now to meet the emerging requirements, thus promoting consumer trust and sustainable business practices.