What is greenwashing?

Greenwashing is more than a trendy term. It undermines consumer trust and impedes global sustainability efforts. Greenwashing is the practice of making false, misleading, or unsubstantiated environmental claims about a product, service, or organization. It typically involves disingenuous communications, including the use of vague language or terminology, natural or green imagery, cherry-picked statistics, or inaccurate labeling.

Fundamentally, greenwashing isn’t about an organization’s environmental impacts or the immaturity of its sustainability programs. It’s about misrepresentation. Organizations should strive for transparency, honesty, and accuracy in their claims—no matter where they are on their sustainability journey.

Why does greenwashing matter?

Greenwashing misleads consumers, investors, and stakeholders. These unreliable labels and claims give a false impression of a company’s sustainable commitment, misguiding consumers seeking to make informed purchasing decisions and undermining public trust.

These dishonest practices exploit the growing demand for sustainability, transparency, and corporate responsibility while distracting from organizations that truly do strive to make a positive impact.

More broadly, greenwashing can mask harmful practices such as high carbon emissions, pollution, and harmful environmental impacts hidden within the supply chain. This leads to negative outcomes for local and global communities and ultimately delays meaningful change on a global scale.

The risks of greenwashing

The risks of greenwashing extend beyond consumers, communities, and the environment—there are immediate risks for companies that practice greenwashing as well. These can include:

• Reputational risk to the brand
• Risks of litigation
• Subsequent market risks of reduced consumer demand

For a broader view of recent greenwashing lawsuits, see this article from Truth in Advertising, which reviews greenwashing class-action lawsuits across a number of industries including home and garden, food and beverage, clothing, personal care products, and more.

What are examples of greenwashing?

Greenwashing can take a variety of forms. Some common practices to look out for include:

• Vague language: A product label, service description, or marketing campaign may use vague terms such as “eco-friendly,” “green,” or “sustainable” without any supporting data or third-party verification.
• False claims: Some products may make claims that are—in whole or in part—false. For example, a product may be marketed as “100% recyclable” while composed of materials that are not recyclable.
• Natural or green imagery: While natural color palettes, environmental imagery and symbols, and photography of green, unspoiled landscapes convey “green” branding, they may not be backed up by sustainable practices or materials.
• Misleading statistics: A brand may feature statistics in marketing that overstate its sustainability efforts or mislead its audience.
• Obscuring the full picture: Some claims may highlight a single positive attribute while purposefully misrepresenting broader environmental impacts of a product or service. For example, components of a product labelled as “eco-friendly” may be derived from natural raw materials but undergo a chemical process during manufacturing that discharges untreated contaminants into local water systems. This is another reason why vague language should be avoided and more specific claims are preferred.
• Superficial certifications or labels: Certifications should be supported by robust frameworks that set meaningful, high-integrity standards and are backed by evidence. Seals and labels that set a low bar or merely give the appearance of sustainability fall under this greenwashing category.
• Commitments without disclosure on progress: A company may publicly state a target or commitment without taking steps to achieve the target or report on progress. Claims of “net zero by 2050” or “reduce plastic use by 25% by 2030,” for example, should be supported by evidence of progress and steps taken in public disclosures such as annual sustainability reports or third-party platforms like CDP or EcoVadis.
• Unverified sustainable financial products: Another example of superficial labels or vague language, some financial products are categorized as “sustainable” without supporting evidence. This broad label has the potential to cause confusion among investors. Many global government agencies have put policies in place to combat greenwashing in financial markets, including funds that are marketed with ESG-related terms without sufficient evidence about their environmental impact.

Consider the following when evaluating potential greenwashing claims:

How is greenwashing regulated?

Global regulations have been put in place to help companies navigate “green” claims and ensure that consumers, investors, and other stakeholders have clarity around the sustainability of products and services. In addition, many consumer protection and advertising laws protect against unfair practices more broadly, which can often include greenwashing.

While the regulatory landscape around this topic is constantly shifting, a few examples of regulations and guidelines that address greenwashing and environmental claims include:

• The Directive on Empowering Consumers for the Green Transition (EU)
• The Financial Conduct Authority’s Anti-Greenwashing Rule (UK)
• The Green Claims Code (UK)
• The Australian Competition and Consumer Commission guidelines for environmental and sustainability claims

In the U.S., the Federal Trade Commission’s (FTC) “Green Guides” advise on environmental marketing claims in the U.S., outlining how to avoid misleading consumers. The guides provide general principles that apply to all environmental marketing claims, as well as how consumers are likely to interpret claims and how marketers should substantiate these claims. They also list how marketers can qualify their claims to avoid deception.

The Green Guides were most recently updated in 2012 to include new guidance on marketers’ use of product certifications and seals of approval, claims about “renewable” materials and energy sources, and carbon offset claims. The FTC sought public comment on potential updates in 2022 and held a workshop on recyclable claims in 2023. They have not yet issued a new guide version.

How can organizations avoid greenwashing?

There are various ways an organization can avoid greenwashing in their marketing. Examples include:

• Public disclosure: Voluntary disclosure of sustainability and ESG data—including baseline data, progress on targets, policies, risks, and even challenges—communicates an authentic commitment and establishes a basis for accountability and transparency.
• Balanced, transparent reporting: Sustainability reporting should accurately reflect where a company currently stands as well as the work that still needs to be done. It’s important to be upfront about where your organization has room to improve, what your ESG risks may be, and what steps you are taking to address them. Transparency and showing growth, progress, and improvement are vital elements of sustainability & ESG reporting.
• Third-party verification: Independent audits and trusted certifications bolster credibility and provide an extra layer of accountability.
• Credible evidence: Ensure claims are specific, accurate, and supported by data while providing clear context (such as baselines and methodologies used).
• Be specific: Avoid broad or absolute environmental claims that cannot be substantiated. When making statements or aligning to industry standards and frameworks, include clear definitions where appropriate.

How can I demonstrate my organization’s environmental credibility?

Building trust in environmental claims increasingly depends on transparency, consistency, and credible validation. Organizations can strengthen confidence in their practices and operations by working with experienced third-party providers along their Sustainability Journey. A qualified partner can help organizations substantiate claims, align with regulatory expectations, and communicate environmental performance with clarity and credibility.

Learn more about progress in sustainability disclosure here.