Examples of greenwashing
In 2015, Volkswagen (VWAGY) attracted greenwashing publicity for a low-emissions marketing campaign. The German automotive giant was cheating emissions tests with proprietary software that could detect when the test was being performed and temporarily reduce emissions. In real-world settings, those engines were emitting 40 times the allowed limit of pollutants.
While this is an extreme example of greenwashing, along with subverting EPA guidelines, Volkswagen is not alone. Here are examples of some of the most common greenwashing techniques in action:
Misleading or irrelevant claims
Food companies may claim their products are “all natural,” “GMO-free,” or “made with organic ingredients.” Other claims, such as a package of almonds advertising that they are “gluten-free,” “vegan,” or “low sugar,” may be technically true. However, almonds have always been a low-sugar, gluten-free, vegan food. The purpose of the labeling is to create a health halo and drive consumers’ purchasing decisions.
Clothing company Hennes & Mauritz (HNNMY +2.20%) has been accused of similar greenwashing with its “conscious collection.” A 2021 report by the Changing Markets Foundation found 96% of H&M’s claims were misleading or vague. The report also noted that a significant percentage of the conscious collection uses synthetic products derived from petroleum, leading to a larger total carbon footprint.
Unsubstantiated claims
Cosmetic companies use similar greenwashing techniques. However, cosmetics and personal care products’ ingredients are not regulated in the U.S., making greenwashing even more difficult to discern. Look out for labels using terms such as “all natural,” “organic,” or “no harmful chemicals.” Consumers or investors can search the EPA’s product database to verify label claims.
BP (BP +1.37%) made greenwashing headlines along these lines after running an ad campaign about working toward cleaner energy. The company remains carbon-intensive. Its pledge to be carbon-neutral by 2050 is a good step, but more immediate action is needed to substantiate claims.
Carbon distraction
Oil companies have become notorious for greenwashing claims. This includes statements about a commitment to emission reduction in their home country while increasing emissions in other countries.
Shell (SHEL +0.83%) boosted its public profile by asking customers what they were willing to change to help reduce emissions. The campaign did not require Shell to reduce their carbon footprint or change their business model even though its activities account for more than 1% of global carbon emissions. Instead, the campaign was used as a greenwashing technique to distract consumers from Shell’s unsustainable practices.
Small steps
Companies also may use a small step toward sustainability to create a green or climate-forward company image. Starbucks (SBUX +0.72%) did this in 2018 when it began phasing out plastic straws, touting the move as the basis of a sustainability campaign. That may have been a step in the right direction, but it doesn’t make the coffee giant a sustainable company.
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