What is greenwashing?
Greenwashing is the act of projecting the products of a company as being environmentally conscious when they are not so in reality. Companies use greenwashing to attract customers who prefer products that do not cause any environmental damage. They make false claims about how their products do not cause harm to the ecosystem and are sustainable.
Firms would usually spend a lot of time and money advertising themselves as an environmentally conscious brand. However, in reality, the firm does not spend that much amount in producing environmentally-conscious goods and removing negative externalities like pollution and ecological destruction coming from their business.
As consumers are becoming more aware of the ill effects of consumer goods on the environment, they are moving towards environmentally conscious products. Many producers seek to take advantage of this by giving a false sense of satisfaction to consumers about the benefits of their products.
This allows firms to overproduce than what the socially optimal level of production is in the economy. When the consumer demand shifted to environmentally friendly products, the producers realised that they would not be able to sell those products which are cheaper to produce and are not environmentally friendly. Instead of looking for safer options, they decided to exploit the current production process by marketing it as environmentally friendly to bring a positive sentiment in the market about the company.
Specific greener alternatives for production might be costlier for companies as they require permits from the government, more expensive equipment like solar panels or costlier inputs to work with. Thus, companies abandon these alternatives by investing money solely in branding and advertising rather than going for these greener substitutes.
The term ‘greenwashing’ was coined in the year 1986 by environmentalist Jay Westerveld. The ideology leading towards greenwashing started when Jay Westerveld saw a note by a resort on a beach asking the customers to pick up their towels on their own. The note urged consumers to help the resort save the environment by picking up towels and reusing them.
However, at the same time, the resort chain was expanding and was commercialising even more. This was not perceived as a very environmentally conscious move. Thus, Westerveld believed that the resort was showing false concerns about the ocean and about the conservation of the coral reefs.
This later progressed to more obvious forms of greenwashing when Westinghouse nuclear plants claimed that they could produce cheaper electricity than other coal plants with far less environmental damage. These marketing strategies came long after the nuclear blasts happened across the globe. By that time, people were aware of the impacts of nuclear energy and a large amount of nuclear waste that it comes with.
TerraChoice, an environmental marketing agency, has given the seven sins of greenwashing which are used to screen various marketing campaigns by companies. These include:
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Companies need not project themselves as completely green organisations. They should maintain a certain degree of transparency with respect to the environmental benefits of using their products.
Giving a falsely glorified image about the environmental consciousness of a company can lead to overproduction in the economy. When companies provide legitimate information, they may be taxed for causing environmental damage which is bound to happen up to an extent. However, making false claims and providing no proof over certain benefits may never allow for optimal welfare to be achieved in the economy.
When companies greenwash their products, it defeats various movements and initiatives taken across the globe to ensure that ecological sustainability is maintained. Therefore, companies must invest more in actually adopting greener initiatives rather than just marketing themselves as greener companies.