Published Monday 22nd March 2021
As environmental concerns become increasingly widespread, ethical credentials are essential to stay competitive. However, due to this increasing need, corporate greenwashing has become an embedded problem.
It is used as a means to connect with potential customers by offering an environmentally-friendly impression that is not necessarily the reality.
As environmental causes are becoming a more predominant focal point, the world’s ethics are growing greener, which has sadly increased the already existing risk of corporate greenwashing.
Our expertise can support your business’s genuine ethical intentions while also reducing costs. Our waste expense management services can assist with reducing waste costs and are designed to help organisations achieve objectives such as zero waste to landfills.
What is Greenwashing?
The term ‘greenwash’ means to present an impression of a company’s credentials so that they appear more sustainable than they really are. These claims will be misleading, vague or unsupported by evidence.
Greenwashing can be used in marketing or business strategies to claim environmentally-friendly products, policies or goals. Instead, the company will have underlying objectives such as increasing market share or profit margins with little genuine resources directed towards sustainability.
Greenwashing is not only deceptive, it also bears other consequences. It pulls vital attention and funding from genuine sustainable efforts. The funds will instead be used to inadvertently support the opposed intentions of the buyer.
Greenwashing is used in many forms, below we have listed three of the most common:
• Energy, effort and expense are used to build awareness of the products to seem eco-friendly as opposed to actually being eco-friendly.
• The pushed products are made from alternative materials that will have a larger carbon footprint when compared to ‘traditional’ materials.
• The manufacturing process is unsustainable but the consumer will be distracted by false or misleading green claims.
The Damaging Effects of Greenwashing
As a result of the growing demand for more sustainable practices, company leaders often find themselves in an uncomfortable position; sincerely respond with their resources to become more ethical, or merely appear ethical.
Companies who either wish to save money or have no desire to implement ethical practices will often inadvertently spend more money on making consumers believe their practices are environmentally friendly.
For true sustainable changes to be implemented, a lot of groundwork is required; it involves sizeable resources, time and risks. This can seem financially daunting when initially applying these practices throughout the business.
However, research from Oxford University has confirmed the correlation between the combination of good sustainability and ESG (environmental, social and governance) with lower operating costs, better profitability and improved share price performance.
The Corporate Consequences of Greenwashing
False environmental credentials are more harmful than cost-effective. The likelihood of being exposed is far greater than ever before.
Many non-governmental organisations are increasingly more cautious. NGO’s are now keeping a vigilant eye over the action of companies claiming to be eco-friendly, which are supported by active and aware consumers.
Greenwashing exposure will inevitably hurt the business and damage its image. In almost all cases of greenwashing, it has negatively affected the businesses’ reputation.
This will impact the sales of the company due to word of mouth and other unwanted forms of publicity, deteriorating the trust between the company and consumers.
Spotting Corporate Greenwashing
Because of the significant consequences of greenwashing, companies should avoid it at all costs. Below are some examples of greenwashing that may or may not relate to your business.
• Contributing to non-profit organisations for a cause and then selling products that contribute to that particular issue.
• Encouraging recycling but providing unnecessary or harmful plastic.
• Sharing environmental claims that the company is legally obliged to enforce.
• Covertly lobbying against environmental measures while sharing pro-environmental messages.
• Providing inaccurate or false environmentally-friendly claims.
In some cases, greenwashing can develop from good intentions, which is why transparency is important and can help prevent any negative backlashes. The best method is to reassess the company’s values and production process, this will allow a sustainable strategy and goal to be applied.
Increase Sustainable Practices
If your company intends to situate itself as an environmentally-friendly advocate, then here are some methods that will support the transition:
- Align your environmental values with your production process and products or services.
- Review your manufacturing process and product materials for any possible eco-friendly alternatives.
- Offer reusable substitutes instead of non-recyclable services and products such as plastic bags.
- Reduce packaging and shipment if possible.
- Avoid dishonest marketing messages.
- Avoid announcing premature eco-friendly intentions and ensure your business’ operations are established before drawing attention to them.
- Consider your values and sustainable strategies before publicly sharing.
- Build credibility by using evidence-backed claims and third-party certifications.
Sustainable Profitability
Although there is an initial investment when transitioning to sustainable production practices, most if not all unnecessary fixed costs will be reduced.
A sustainable infrastructure within a company can reduce costs in several different ways:
- Simplified and sustainable packaging will save unnecessary costs.
- Eliminated harmful waste products will reduce fees, fines and penalties.
- The reduction of non-toxic chemicals within the manufacturing process will reduce the amount of water required for production and waste disposal.
- Additional cost savings are acquired by recycling water which can be used to meet other alternative needs.
- Energy-efficient lighting can reduce costs and will also have an elongated lifespan.
In the long term, these techniques will not only recruit a larger gross profit margin but will further increase it by appealing to a wider audience, who will be more inclined to invest and revisit.
As greenwashing indicates, sustainability alongside PR works wonders when combined. Sustainability opens up the organisation to more PR opportunities that will solidify the company’s influence in the industry and grow awareness of the company’s value, reaffirming and creating strong consumer relationships.
If your business would like to improve its sustainability by achieving objectives or reducing wastage costs, Expense Reduction Analysts can help support your company. Our specialists offer invaluable advice and expertise to set you up for long-term success. Get in touch with our team to find out more.