~ Alice Oswald | Senior Planetary Accountant | 26.05.23
Does that "Organic Certified" label on the box of cereal you just purchased indicate a real commitment to the environment? Or is it simply a façade - covering up carbon or water intensive processes? How many of the >450 eco-labels on products today are giving you the information you need to make good choices and how many are simply a new style of marketing campaign?
In this article, PAN explores greenwashing tactics that consumers should be aware of and unpacks some of the challenges facing businesses that are genuinely committed to minimising environmental impact in this era of rampant greenwashing.
''Many organisations make bold claims around a specific sustainability credential, to draw attention away from other, more questionable environmental practices.''
Greenwashing – what is it anyway?
The term “Greenwashing” is not new; it was coined in the 1986 by Jay Westerveld. Whilst holidaying in Fiji, Westerveld noticed signs around his hotel encouraging guests to re-use towels because by conserving water and energy, guests would be doing their part to reduce ecological damage to the ocean and reef surrounding the resort. While Westerveld agreed in principle – he was also aware the hotel was involved in some major expansion plans along the coast, with an apparent disregard to the health of the same reef and ocean they had been preaching about preserving.
This kind of diversion noted by Weterveld is a common tactic in greenwashing today. Many organisations make bold claims around a specific sustainability credential, to draw attention away from other, more questionable environmental practices. Also known as ‘selective disclosure’ or ‘token gestures’, an example of this may be the use of paper from a ‘sustainably harvested forest’ which doesn’t consider other environmental impacts in the paper-making process such as carbon emissions or chlorine used in bleaching.
Another example of greenwashing is the use of misleading claims such as “recyclable” on products which cannot be recycled in the location they are sold. The recycling of coffee pods and single-use coffee cups are good examples of this type of greenwashing. Canadian company Keurig was fined $3m last year for claiming that its single-use ‘K-pods’ could be recycled if their plastic film was removed, and the coffee grounds emptied. In reality, the K-pods were not widely accepted for recycling in any province except Quebec and British Columbia.
Carbon offsetting underpins other types of Greenwashing. Carbon offsets or credits are intended to complement a company’s emissions reduction efforts. However, some companies are leveraging offsets to make big decarbonisation claims such as “carbon neutral” when offsets are disproportionately high compared to the emissions reduction actions and initiatives in place. Others actively use offsets to enable the continuation of carbon intensive industries such as oil, coal and steel. Greenwashing can also occur where offsets are sold for carbon sequestration efforts which would have occurred irrespective of the company’s investment. For example, some offsetting programs offer offsets based on ‘avoided deforestation’. This type of “avoided emission” offset is under scrutiny as it is based on difficult to verify assumptions around landowners’ intentions to harvest the forest. In the UK, the Advertising Standards Authority is disallowing the terms “carbon neutral”, “net zero” and “nature positive”, unless the company can prove that the carbon offsets they are purchasing are genuinely contributing positively to the climate. In New Zealand, the Ministry for the Environment has released guidelines for businesses when reporting voluntary offset activities.
How pervasive is it?
In a recent article, Greenpeace have shed light on the frightening extent of greenwashing in the fashion industry. This article investigated some of the ‘self-assessed’ green marketing labels across 14 European fashion labels, considering:
What is the basis of the claims that are made?
How reliable are they?
What is included in the claims?
Can consumers trust the claims?
Are the claims independently verified?
The results are alarming. Recurring themes included a lack of third-party verification, lack of supply chain traceability, and frequent and misleading use of the terms “sustainable” or “responsible” to describe materials which are only slightly better than the original/alternative materials. Greenpeace also uncovered pervasive use of labels with words like 'conscious' or 'mindful' with very little to substantiate or support these claims.
Here in Aotearoa, Consumer NZ have started a movement to end greenwashing. They are calling for an independent investigation into greenwashing in specific industries and increased regulations to ensure green claims are substantiated. ConsumerNZ conducted their own research into Greenwashing in supermarkets. Examples of greenwashing ranged from ‘paper pouches’ which contained 35% plastic, to the use of vague terms such as ‘nature inspired’ and ‘planet-conscious’ without any basis or explanation.
Some businesses are making a positive impact...
Given the current market and regulatory pressure it is not surprising that companies are keen to market themselves as sustainable. Whilst the Greenpeace and Consumer NZ investigations both uncovered numerous examples of dubious greenwashing, there are scores of businesses in NZ and internationally who are a genuinely working towards lowering their environmental impact. The unsubstantiated or misleading claims by some have made consumers rightfully wary of environmental claims making it extremely challenging for environmentally leading brands to credibly demonstrate their efforts and commitments to the environment.
In some cases, the challenge is about achieving cut-through. Organisations genuinely committed to positive environmental outcomes may have become certified BCorp, certified Organic, Marine Stewardship Council Certified, or use fully recyclable materials as part of their journey. However, because greenwashing has become so pervasive, consumers remain wary they might be using these claims to hide something else. As there are no mandatory or standardised disclosures for products – it is extremely difficult for consumers to differentiate between companies using these certifications to demonstrate good performance and those using them to divert attention away from other, unsustainable practices.
In other instances – the challenges are more nuanced. For example, in 2021 the Commerce Commission investigated and formally warned a Christchurch company who claimed their coffee cups, made entirely of paper, were ‘recyclable’ on their website. The cups are not only recyclable, they are also compostable and would break down within 3 weeks if placed in a compost bin – so they are an innovative step forward. As recycling facilities in NZ do not accept any hot drink cups (because it is difficult to tell which contain plastic, and which don’t), the claim “recyclable” is misleading in context – hence the warning. However, without being able to promote such efforts – will other companies follow suit with similar innovations that are ahead of existing infrastructure?
A recent IBM Institute of consumer behaviour study reported that 62% of consumers would change their purchasing habits to reduce negative environmental impacts. However, Kantar/Sustainable Business Council Better Futures Report noted that 63% of consumers are confused about the way businesses communicate about their social and environmental commitments. Our team reviewed the literature on the impact of eco-labels on purchasing decisions which suggests that in the current landscape they do very little. However, the studies consistently show that if eco-labels were easy to understand, traceable, independently certified, allowed cross product comparisons, and benchmarked performance against what is scientifically necessary – eco-labels would impact purchasing decisions.
Isn’t this already regulated in New Zealand?
In 2020 the Commerce Commission released Environmental Claims Guidance for businesses that include ‘be truthful and accurate’, ‘substantiate your claims’, and ‘use plain language’. There are mechanisms to formally investigate and prosecute companies under the Fair-Trading Act if they are found to be making misleading or unsubstantiated claims – with fines of up to $600k. The Financial Market Authority (FMA) also has powers to hold financial services providers to account under the fair dealing provisions in the Financial Markets Conduct Act 2013.
NZ is working towards an Agreement on Climate Change, Trade and Sustainability (ACCTS) with Fiji, Norway, Iceland, Switzerland and Costa Rica. The aim of the agreement is to “increase the alignment and mutual responsiveness of trade and climate policy responses.” The scope of the agreement includes removal of tariffs on environmental goods, but more relevantly to greenwashing, the “development and implementation of voluntary eco-labelling programmes''.
What we are missing, both in New Zealand and internationally, is a standardised way of communicating environmental performance to consumers, that requires businesses to disclose a holistic view of the environmental impacts of the products and services they are selling, in the context of what is scientifically necessary for a healthy environment. In fact, most businesses do not even have this full perspective themselves. As such, there is an urgent need for a credible system that enables businesses to quantify the environmental performance of their products, supports them to use this data to improve performance and to communicate this to their customers in a way that is easy to understand, which thus enables buyers to make better purchasing decisions and drive demand for innovative, low-impact or regenerative solutions. While there are already market drivers prompting the development of such a system, coupling this with regulation to would accelerate uptake and increase credibility by requiring businesses are measuring and report impacts in a clear and consistent way.
Planetary Facts
At the Planetary Accounting Network (PAN), we have been working in partnership with industry on a way to address this challenge.
Imagine a world where the impacts of products and services on the planet’s health had to be disclosed – just like the impacts of food on our own health are disclosed in nutritional fact labels. Our vision is for greenwashing claims to be replaced with a credible, science-backed labels that demonstrated the environmental footprint of products in a clear way. Planetary Facts labels would allow buyers to understand the impacts of a product or service on climate change, air quality, biodiversity, water, waste, and land- across its life cycle, and in the context of scientifically derived benchmarks.
Over the last 18 months, PAN and our partners* have established a methodology to enable a credible and consistent approach to quantifying environmental impacts of products on the Planetary Boundaries. PAN have also been working with focus groups to develop a concept design for a Planetary Facts Label that enables consumers to easily digest this information at a glance. Our vision for this initiative is to cut through the current confusion of eco-labelling, allow consumers to make good purchasing decisions, enable businesses to credibly demonstrate the environmental performance of their products, and to thus encourage a positive innovation cycle that supports a future within the planet’s limits.
*Special thanks to our Partners Massey University, The Warehouse Group, Beca, and thinkstep-anz for supporting and funding this initiative.
If you are interested in finding out more or joining this initiative, please feel free to contact us at info@planetaryaccounting.org