(NewsNation) — “Greenwashing” has become a hot-button topic lately for environmentalists and world officials.
A growing market has been established for products that minimize damage to the environment, and in a 2024 survey, 46% of consumers said they are purchasing more sustainable products to help the environment.
However, greenwashing litigation is evolving worldwide, with distinct drivers and enforcement priorities across regions and countries.
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So, what exactly is greenwashing? What are the risks that come with greenwashing? Which companies are likely to use greenwashing?
What is Greenwashing?
The United Nations defines greenwashing as misleading the public to “believe that a company or other entity is doing more to protect the environment than it is,” all while promoting false, distracting solutions to the climate crisis.
Examples of how a company can greenwash include making unsubstantiated net-zero claims; spotlighting minor improvements when a product meets its minimum regulatory requirements; and highlighting single attributes while disregarding a product’s broader environmental impact.
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“Greenwashing occurs mostly when companies ‘overcommunicate or under-communicate’ on sustainability performance,” said Andreas Rasche, a professor at Copenhagen Business School in Denmark. “Misleading branding, vague claims, and unregulated labels on products make it difficult for consumers who are aiming to reduce their environmental footprint to make informed decisions.”
What are the risks of greenwashing?
The risks of greenwashing can be damaging not only to consumers, but the companies as a whole.
Companies can experience increased legal risks and complexity resulting from an insufficient global alignment on sustainability regulations. This problem alone makes compliance more challenging.
“We see an increase in NGOs being very active because there is a pushback on sustainability as a whole, and the different governments around the world push now even harder in relation to greenwashing or even climate change litigation,” said Daja Apetz-Dreier, Partner & Co-Leader of the ESG & Sustainability Advisory Group at Morgan Lewis.
Which companies use greenwashing?
Manufacturing enterprises are among the companies where greenwashing has become prolific, especially those specialized in oil and gas, consumer products, and transportation sectors.
“From a comprehensive perspective, both governmental and public entities have been identified as crucial actors in the governance of greenwashing behaviors,” a study says.
Companies have been advised to provide legal guidance and comprehensive training to help mitigate the risk of costly greenwashing claims.
