Greenwashing is a marketing strategy that seeks to create the illusion that a company or organization's products, goals, and policies are environmentally friendly. In practice, however, this is misleading consumers, because the declared ecological responsibility is not based on reality.
For example, a company may present itself as "green" even though it produces products that are harmful to the environment.
Consumers deserve to have true and transparent information about the ecological properties of products and companies. (More on co2news.sk)
Green Claims (green claims) are statements or marketing communications that companies use to present their products, services, or practices as environmentally friendly. friendly or sustainable. This is information that is intended to convince consumers that a given product or service has a positive or less negative impact on the environment. (More on co2news.sk)
In today's world, where climate change has become an undeniable reality, more and more people are trying to live sustainably. Companies are also responding to this demand, but not always sincerely. Many companies spend more money on marketing their "greenness" than on actual action. (more…)
Nowadays, as consumers increasingly demand products with a low climate impact, a "green" identity has become a key competitiveness factor for companies in the European Union. However, if these products and services (more…)
Greenhushing is the practice in which companies or organizations intentionally downplay their environmental initiatives or sustainable practices. Rather than boasting about their environmental achievements (as they do in greenwashing), they choose to remain silent about them.
Why does it matter?
– Less pressure on others – If companies do not talk about their environmental activities, the overall shift towards sustainability may slow down because a positive example for competitors and the public is missing.
– More difficult control and transparency – If companies do not disclose their sustainable actions, it is more difficult to assess their true environmental impact and compare them with others.
– Loss of consumer confidence – Many customers want to support sustainable brands, but if they are unaware of their activities, they may opt for less environmentally friendly alternatives.
– Investors and regulations – There is growing pressure from investors and regulators for greater transparency in the area of ESG (environmental, social and governance factors). Greenhushing can pose reputational and legal risks for a company.
Why do companies greenhush?
– Fear of criticism or accusations of greenwashing.
– Uncertainty about the accuracy of ecological data.
– Fear that sustainability will be perceived as a marketing gimmick.
While greenhushing may seem like a prudent strategy, it ultimately slows down the necessary ecological transformation. Transparency and open communication are key to real progress on sustainability. Spring
ESMA will monitor the implementation of its guidelines, including guidance on the labelling of funds using ESG criteria, sustainability conditions or the promotion of sustainability information. The organisation will lead supervisory discussions and provide specialised training through the Sustainable Finance Knowledge Centre.
ESMA has recently reviewed its key performance indicators and created new result indicators that measure the extent to which its priorities are being met. In the area of greenwashing risk in the fund sector, the new relevant result indicator concerns the percentage of European funds with sustainability features where there is a risk of misleading investors. This risk is assessed based on the consistency and clarity of the fund documentation and its correspondence with the portfolio holdings data using natural language processing techniques.
What's next?
Tackling greenwashing remains a priority for ESMA, reflecting the increasing regulatory focus on sustainability. ESMA will continue to support the EU’s transition to a sustainable economy by working to prevent the risks associated with greenwashing. In terms of concrete steps, ESMA announced plans to produce a report on addressing the risk of greenwashing in the sustainable investment fund market by Q2 2026. In addition, it will finalise the project “Tackling the risk of greenwashing in the sustainable investment fund market” as part of the European Commission’s technical support for 2024 and finalise it in 2026.
What should fund managers do?
The focus on reducing the risk of greenwashing and the provision of statements is nothing new, but it is a reminder that this is a key priority. Fund managers should carefully review their sustainability claims in fund materials to ensure that they are clear, fair and not misleading, reflect the true state of affairs and are consistent with any ESG disclosures (for example, under the SFDR). With the growing divergence in approaches to ESG between the US and Europe, these issues are even more important, and managing the different dynamics in the presentation of this information is therefore a key challenge for global managers. Spring
Link to the programming document for 2026-2028 here
The CMA has published further guidance on how fashion retailers can comply with the Green Claims Code; a key set of rules that determine whether claims about the environmental impact of products or brands (known as green claims) breach UK consumer protection regulations. Much of the guidance broadly repeats existing guidance (see our previous article Snapshots for example), but with some useful fashion-focused features to help retailers understand exactly what works and what doesn’t in the industry. It also includes practical examples of certain practices that the CMA considers to be substandard. (Oliver Bray, more at lexology.com)
Greenwashing, also known as "greenwashing," refers to the practice of companies and organizations pretending to be green or promoting sustainability in order to improve their image, but without actually making fundamental changes. The behavior may include the use of advertising slogans, false claims about the greenness of products, or misleading labels that create the impression that the company is acting green, although its main activity and approach are still harmful to the environment.
Greenwashing creates the impression that consumers are contributing to conservation with their purchases, but they are often only contributing to the environmental profits of higher-ups who exaggerate their claims. Here are 10 examples of greenwashing to help you better understand the problem and how to spot it.
1. "Bioplastic" products
Many companies have started using terms like "bioplastic" or "biodegradable" to describe their products, giving consumers the impression that plastic is greener. However, the truth is that many bioplastics are actually created from petroleum derivatives, and some only break down under certain conditions, such as in industrial composting facilities, which are not normally available. In practice, such plastic can end up in landfills, where it is not broken down, thus still polluting the environment.
2. "Ecological"
Names such as "eco-bottle" or "natural bottle" are becoming increasingly common when selling bottled water. These names may seem ecological, but they are often plastic bottles that are only partially recyclable. Indeed, the ecological impact of bottled water, including the production and transportation of bottles, is very large compared to the use of tap water.
3. Cosmetics with "natural ingredients"
Cosmetic brands label their products as “natural,” “organic,” or “chemical-free.” These claims highlight a few natural ingredients, no products may contain harmful chemicals or ingredients that are not good for the environment. Terms such as "natural" are not regulated by legislation, which means that a brand can use these claims even if the product is not fully organic.
4. Car companies promoting "low-emission vehicles"
Many automakers promote "low-emission" or "eco-friendly" vehicles that have only slightly reduced emissions compared to traditional models. Although these vehicles produce fewer emissions, they are still powered by fossil fuels and contribute to pollution.
5. Fashion brands with "ecological collections"
Some fashion brands have started to offer collections marked as "sustainable" or "eco-friendly," which appear ecological. These collections may contain materials such as organic cotton or recycled polyester, but this is only a small part of the brand's offer. Continuing production is another fast fashion that consumes large amounts of resources and contributes to the destruction of the planet. These brands can thus gain an image of ecological responsibility, even if most of their activities are still unsustainable.
6. Energy company with renewable energy programs
Energy giants often highlight their investments in renewable sources such as wind and solar power. While these investments do help the development of clean energy, they can only provide a small portion of their business, while the majority of revenue still comes from fossil fuels. These companies can thus present a green image, but their carbon footprint remains high.
7. Food with "eco" or "bio" packaging
Some food companies use labels such as "eco" or "bio" on the packaging of their products, even if the product itself or the process of its production is not environmentally friendly. An example can be the use of cardboard packaging instead of plastic packaging, which, however, contains a thin plastic layer, which makes it impossible to recycle it. This procedure looks ecological, but in reality it can create a similar impact as classic plastic packaging.
8. "Sustainable" aviation fuels
In recent years, airlines have started promoting the use of "sustainable" aviation fuels (SAFs), which promise lower emissions. However, these fuels often contain only a small proportion of sustainable components, while most fuels come from fossil sources. This will not significantly reduce the overall emission during the flight, but the company gets the impression that it is ecological.
9. Banks promoting "green" investment funds
Some banks offer clients "green" investment funds or "sustainable investment funds." These funds may contain shares in renewable resources, but none may also include investments in fossil fuels or unsustainable industries. Banks thus use marketing to support an ecological image, even if they finance projects that are not sustainable.
10. Recycled plastics in the automotive industry
Car companies have started using recycled plastics in the interiors of their vehicles and present it as an ecological innovation. Although the use of recycled materials is a positive step, it is a small shift in the overall context of car manufacturing.
How to recognize greenwashing and why is it important?
Green deployment can be confusing for consumers and lead them away from truly sustainable options. If we want to minimize our impact on the planet, we should be critical when making decisions and check companies' claims about their "greenness."
Greenwashing undermines efforts to protect the environment because it distracts from real solutions and sustainable options. It is therefore important that we as consumers approach 'green' claims with a critical eye and support only those brands and products that have a real environmental benefit. Spring
The term "greenwashing" has gained importance in recent years, as more and more companies try to present their products and services as environmentally responsible. However, in many cases behind this green facade hides a reality that is much less flattering. Greenwashing is a deceptive practice designed to give consumers the impression that a product or service is greener than it actually is.
The resources provide valuable insight into this issue and point to various aspects of greenwashing regulation in the EU.
Why is greenwashing a problem?
Greenwashing undermines consumers' trust in environmental claims and makes it difficult for them to make informed decisions. Ultimately, this hinders real progress in sustainability.
How does the EU fight against greenwashing?
The EU adopts legislative measures to regulate greenwashing and strengthen transparency in the field of sustainability. The sources mention several initiatives:
What is the impact of these measures?
These EU legislative initiatives have the potential to reduce the extent of greenwashing and strengthen the credibility of environmental claims. They set clearer rules, definitions and disclosure requirements, making it harder for companies to manipulate information and avoid liability.
The future of the fight against greenwashing
Although the EU is taking steps to regulate greenwashing, combating this issue is a long-term process.
In conclusion, greenwashing is a serious problem that undermines consumer confidence and hinders real progress in sustainability. The EU adopts legislative measures to regulate greenwashing and strengthen transparency, but the fight against this issue requires long-term efforts on the part of regulators, companies and consumers. Spring
Unreliable environmental claims or eco-labels can mislead consumers and give them false impressions about the environmental impact or benefits of a company or brand. This practice is known as "greenwashing". Fraudulent products or misleading advertising may breach the Fair Trading Act or the Consumer Protection Act. However, due to the lack of transparency and asymmetry of information, it can be difficult for regulatory authorities and rights holders to prove corporate greenwashing.
In March 2023, the European Commission approved a proposal for a directive on environmental claims, which aims to tackle the problem of misleading environmental claims by setting strict standards for environmental claims and introducing fines for greenwashing practices. This law is expected to be approved by the European Parliament by 2024.
The aim of this directive is to create a global standard for environmental claims, particularly with a focus on companies doing business in the EU market. In addition to companies from the EU, foreign companies (outside the EU) aimed at consumers in the EU must therefore also comply with this directive. However, there are exceptions: Small businesses with fewer than 10 employees and an annual income of less than 2 million euros are exempt from the obligation to comply with the rules.
This directive sets strict certification standards for ecological claims. If companies want to make ecological claims for themselves or their products, they must prepare rigorous and scientifically recognized evidence that is verified by independent and officially recognized certification bodies, which should then issue a certificate of conformity. (Chun-Kai Huang, more at lexology.com)
In recent years, ever-increasing consumer awareness of climate and environmental protection has led to the growing importance and spread of sustainability statements in advertising, the so-called green claims. Sometimes catchphrases such as "100 % CO2-neutral", vague expressions such as "climate friendly" or various seals of quality are used. This often makes it difficult for consumers to verify the veracity of such advertising claims. Exaggerated, inaccurate or euphemistic sustainability claims (“greenwashing”) are not only considered socially frowned upon, but sometimes also cross the boundaries of what is legally permissible. In Austria, this limit has so far been the Fair Trade Act with a general prohibition of deceptive business practices in accordance with § 2 of the Federal Act against Unfair Competition (UWG). There are currently no specific rules for environmental claims in Austria. (Mag. David Konrath, Mag. Christian Zimmer, more at lexology.com)
EIOPA issued its final report on 4 June 2024, which contained its recommendation to the European Commission on the risks of greenwashing and the supervision of sustainable financial policies. The report was issued following the Commission's call for advice in May 2022, which in summary consisted of three parts:
The report serves as EIOPA's final contribution to the call for advice and addresses the first and second parts of the Commission's requests. EIOPA addressed the first part in its Greenwashing Progress Report of 31 May 2023. (Eoin Caulfield, Ian Murray, Catherine Carrigy, more at lexology.com)
Greenwashing is back on the agenda after the Council of the European Union, after various discussions and exchanges of views, adopted on 17 June its position ("general approach") on the Green Claims Directive, which aims to tackle greenwashing and help consumers make truly greener decisions when purchasing a product or using the service.
This is the last attempt to influence to some extent the course of the next legislative phase, which will be managed by the newly elected parliament.
The guidelines are approved by the Council and the European Parliament on a proposal from the Commission, and in this case the Council decided to issue "general guidelines" to give the newly elected Parliament an idea of its position on the legislative proposal submitted by the Commission. . This should speed up the legislative process and make it easier to reach an agreement. (Guolo Elisabetta, more at lexology.com)
Green claims are ubiquitous and have almost become standard across industries. However, many approach green advertising critically, often linking it with the term "greenwashing". Associations for consumer protection (more…)
Regulation (EU) 2019/2088 " on the disclosure of information related to sustainability in the financial services sector ” imposes requirements on the disclosure of the environmental and social effects of transactions on financial markets when creating financial products for their participants and on financial advisors when providing investments or insurance. consulting for end investors. Such disclosures relate to the integration of sustainability risks, the consideration of adverse sustainability impacts and sustainable investment objectives, or the promotion of environmental or social considerations in investment decision-making and advisory processes. Regulation 2019/2088 aims to prevent greenwashing and increase transparency by a) reducing information asymmetries in the relationships between principal agents regarding the integration of sustainability risks and b) taking into account adverse sustainability impacts and promoting environmental or social characteristics that require financial market participants and financial operators to take into account pre-contractual advisors and ongoing disclosure of information to end investors. (Dimitris Chatzimichael, more at lexology.com)
In today's business environment, sustainability and environmental awareness have become paramount. However, it is crucial for businesses to avoid misleading or exaggerated claims about their green initiatives, a practice known as greenwashing.
How can businesses navigate the complex world of sustainability claims and maintain their credibility?
To shed light on this important topic, the company's intellectual property team recently hosted a multi-jurisdictional Lexology webinar masterclass on preventing greenwashing and navigating sustainability claims. This article aims to highlight some of the key points discussed during the webinar and provide valuable information for businesses seeking to maintain credibility and transparency in their sustainability efforts. ( Dan Smith, Miray Kavruk, Alexis Augustín, more at lexology.com)
The European Council announced today that it has reached agreement on a series of proposals to protect consumers from greenwashing, introducing requirements that force companies (more…)
The Green Claims Directive is a proposal of the European Commission. Its aim is to limit the effects of greenwashing and increase the control of producers. The Green Claims Directive (GCD), officially (more…)
Misleading claims that exaggerate how environmentally friendly a product is, known as "greenwashing", have made it difficult for consumers to identify genuine green products.
That's according to new research from the Economic and Social Research Institute (ESRI) and the Environmental Protection Agency (EPA), which also found that consumers who are informed about greenwashing are better able to identify it.
The research bodies' experiment echoes previous EU calls for better education about the environmental durability of products and suggests that companies that greenwash their products are spoiling the competition for genuine eco-friendly brands. (More on thejournal.ie)
The European Commission and EU consumer authorities have sent letters to 20 airlines "identifying several types of potentially misleading environmental claims", focusing on "claims by airlines that CO2 emissions from flying could be offset by climate projects or the use of sustainable fuels". In particular, the authorities stressed that "airlines have yet to clarify whether such claims can be supported by reliable scientific evidence". (Jacob H. Hupart, more at lexology.com)
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