What’s greenwashing? Here are five ways to spot greenwashing.

The term sustainability is enjoying great popularity – but it’s been much more than a trend for some time. There is growing awareness of environmental, social and ethical responsibility. In every industry, companies are expected to act in an environmentally friendly, socially responsible and ethical way.  More and more investors are not just seeking opportunities to generate returns, but are instead pursuing specific financial and sustainability goals when investing. Investors want to understand and have a greater say in the impact of their investment. They wish to ensure their assets are invested responsibly but without lowering their sights in terms of yield.

The growing popularity of sustainable investment means the crucial question as to which companies are genuinely pursuing environmental goals and which misleadingly present a sustainable image is becoming ever more decisive. In this article we show you five ways of spotting greenwashing.

Greenwashing – deliberately deceiving consumers

Greenwashing is the deliberate deception of consumers. Companies convey an eco-friendly image without any grounds for doing so. Their aim is to foster  goodwill amongst consumers and the public,  to sell products at a premium or to attract investors.

Investors are now also faced with countless different labels, standards and evaluation criteria for sustainability. That makes finding their way through this tangled web of environmental approaches extremely difficult. It also creates grey zones that lead to greenwashing.

Here we show you five ways of spotting   greenwashing. This will put you in a much better position to assess which companies or sectors are worthwhile investing in – if your aim is sustainable investment – and which you should steer well clear of.

No. 1: Vague wording and ambiguous statements

Anyone can claim “to care deeply about the environment”, but what do the facts and figures tell us ? If a company claims to be environmentally friendly without indicating specific measures, the alarm bells should start ringing. Not just words, but also images, videos and illustrations on websites, which allude to a green policy, can create a misleading image about a brand.

No. 2: Using one green product to divert attention from the rest of the range

Some well-known and major brands do it to lend their company a fresher sheen, but new companies are equally guilty: a green product is created and its virtues extolled on the market with forceful advertising and PR measures. However, various other products are sold in the background that can by no means be classified as environmentally friendly. In other words, one eco-friendly product is used to divert attention from the company’s other unsustainable ones.

No. 3: Irrelevance – features are highlighted which are accurate but not important

Some companies make irrelevant claims rather than false ones. They highlight features that hint at a green approach, but which are not actually worthy of mention as they’re provided for by law and are thus already considered standard. This may concern manufacturing processes, contents or other product features.

No. 4: Sugarcoating – attributes are highlighted excessively

Some brands also mislead consumers about their product’s sustainability attributes. They emphasize them excessively while completely overlooking any drawbacks.

No. 5: Misleading customers through false statements and invented labels

There’s lots of sustainability jargon and many terms are not officially protected. Wording that’s unclear, invented or not protected is often used to mislead customers. Some brands even go as far as printing their own seal-like label on packaging, even though it’s not an official certificate.

To sum up: the lines are blurred

Growing awareness of and demand for sustainability in society increases pressure on companies and their business activities to constantly live up to these expectations. This means they may be tempted to greenwash their products.

This leads to minor or serious cases of duplicity that misleads consumers. But don’t forget, commitment to social, environmental and cost-effective policies and doing everything above board presents major challenges for companies. However, companies should not try to use sustainability policies as a business card for marketing purposes, but instead implement them in their business activities as effectively as they can.

Find your own happy medium and focus on the environmental issues that matter most to you. Do some research of your own on the  production processes, CO2 performance and sustainability goals of the companies you’re considering investing in. Always look for impartial information, such as from independent rating agencies. And don’t be afraid to ask questions.