Since the 2015 Paris Agreement, an international treaty on climate change, this has led to lots of companies trying to become more environmentally friendly but has also led to more “greenwashing”. Greenwashing is where a company’s appearance of being environmentally friendly, and action are very different. For example, companies involved in greenwashing behaviour might make claims that their products are from recycled materials or have energy-saving benefits, but actually aren’t.
Companies try to avoid total dishonesty, by usually making sure some of their environmental claims are partly true. But companies engaged in greenwashing tend to exaggerate their claims or the benefits in an attempt to mislead consumers. For example back in 2019 McDonald’s introduced paper straws that turned out to be non-recyclable. This is a classic example of a corporate giant appearing to address an issue concerned with plastic pollution, without actually doing anything. This is not only greenwashing but also led to a discussion of the questionable practice of cutting down trees to make disposable straws.
Recently Deutsche Bank AG’s investment has been under scrutiny and was raided last month over a $1tn greenwashing scandal. The asset management arm of the bank is accused of selling investment products as more environmentally friendly than they were, the former DWS head of sustainability blew the whistle on the asset manager last year, saying it would often overstate the success of its environmental, social and governance (ESG) strategy. DWS is already under investigation by the Securities and Exchange Commission and federal prosecutors in the US, over the issue and the claims of greenwashing contributed to the resignation of the chief executive officer, according to DWS Group Supervisory Board Chairman Karl von Rohr. This is the biggest greenwashing scandal to emerge to date.
Greenwashing can cause harm to businesses once true claims surface, resulting in consumer backlash, loss of customers and drop in sales and revenue. This can damage the reputation of the company causing harm in the long-run as well as the short-term.
Greenwashing: It is when a business spends more time and money on marketing itself as environmentally friendly than on actually minimising its environmental impact.
All BeComAware content is reviewed and approved by industry professionals.
By Victoria Wilson – BeComAware Ambassador