Corporate greenwashing and its dangers

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greenwashing

The world needs to act on climate change quickly. Based on current emissions, by the year 2100, the world will have experienced between 2.7C and 3.1C of warming. The result will be catastrophic: higher sea levels will force millions of people to relocate to higher ground, while extreme weather – hurricanes and megadroughts – will become more common. One of the best ways to mitigate global warming is by cutting carbon emissions. And as a result, many corporations have promised to lower their environmental impact. But what happens when corporations mislead the public? Below, we explore corporate greenwashing and its dangers.

What is corporate greenwashing?

Greenwashing is a term that describes the process of businesses falsely giving the impression that their products, services or ethos are environmentally sustainable. For instance, greenwashing will occur when a corporation is misleading about its product. While they might claim it’s sustainable, in reality it will have few benefits. The effect of greenwashing is magnified by the opportunity cost of wasting resources on misleading the public. Businesses that are guilty of greenwashing will spend sizable resources on PR to convince the public, rather than using resources to lower their environmental impact.

Why Environmental, Social and Governance (ESG) is important

If a company is caught greenwashing, then it can severely damage the trust consumers have in it. Instead, by pivoting to ESG, a company can secure its public image. ESG is an evaluation of a firm’s collective consciousness of social and environmental issues. The benefit of environmental, social and governance is that it can show transparency to the consumer. Transparency can help bridge the gap from artificially caring about the environment towards showing genuine concern. Even if a business isn’t effectively environmentally sustainable in the present, ESG can demonstrate to the consumer that they’re taking ethical and incremental steps to improve this. 

Accusations of corporate greenwashing

There are plenty of examples of businesses being accused of corporate greenwashing. For instance, greenwashing is an accusation that has consistently been levelled at fossil fuel giant BP. In December 2019, an environmental group called ClientEarth made a complaint against BP for misleading the public with low-carbon energy product advertisements. This was because, in reality, more than 96 per cent of the company’s annual capital expenditure was on oil and gas. Low-carbon adverts were – effectively – a smokescreen to improve BP’s public image while the business continued to profit from unsustainable activities.

Corporate greenwashing poses problems in the battle to lower carbon emissions. For the public to make informed decisions to lower their carbon consumption, they need clear, accurate information. The best way to do this is by following a transparent environmental, social and governance strategy.