The past few years, we’ve seen an increase in the number of consumers that are prioritizing sustainability. As a result to that, companies are making efforts to appear ‘greener’. That being said, not all green claims are genuine. Deceptive practices that mislead consumers about the environmental benefits of products or services are becoming more common. The good thing is that, as people become more aware, they start to question these claims, which leads to more established regulations.
In fact recently, many countries have taken a significant step to tackle greenwashing with the introduction of a new law. This blog explores what greenwashing is and why it matters. We also provide suggestions of how to spot it and cover recent legislative efforts, such Canada’s Bill-59, to combat it.
What is Greenwashing?
Greenwashing is the practice of making false or exaggerated claims about the environmental benefits of a product, service, or company. The term “greenwashing” was coined by environmentalist Jay Westerveld in 1986 in an essay criticizing the irony of the “save the towel” movement in hotels at the time. Common forms of greenwashing include misleading labels, where products are labeled as “eco-friendly” or “green” without substantive proof. Selective disclosure, which includes highlighting a single positive environmental aspect while ignoring significant negative impacts can also be standard practice in greenwashing. Lastly, the use of imagery and jargon has also become commonplace, often involving green colors, images of nature, and terms like “sustainable” without clear definitions or evidence.
How to Spot Greenwashing
Being an informed consumer involves a critical eye and some research. To see if a product or a business is genuine or if they’re greenwashing, look for 4 things: buzzwords, evidence, verification and sustainability. Here are a few tips to help spot greenwashing:
Look for Certification
Verify if claims are backed by reputable third-party certifications (e.g., Energy Star, Fair Trade).
Check the Fine Print
Read the details of environmental claims to see if they are specific and substantiated.
Research the Company
Investigate the company’s overall environmental practices and transparency.
Beware of Vague Claims
Be cautious of terms like “eco-friendly” or “natural” without clear definitions or context.
Impact and Consequences of Greenwashing
Greenwashing misleads consumers who want to make environmentally friendly choices, into supporting businesses that aren’t truly sustainable. Over time, repeated exposure to false claims can make consumers skeptical of all environmental claims, even those of truly responsible businesses. Plus, resources and attention directed to greenwashed products could be better used to support genuinely sustainable practices.
For companies, greenwashing can have significant consequences. These can include legal repercussions, reputational damage, and financial losses. Prolonged misleading claims can also result in fines and legal actions. Once exposed for their greenwashing practices, companies can suffer long-term damage to their brand and customer trust. And a decreased consumer trust can hurt a company’s bottom line.
Recent Developments
At the beginning of the year, Europe introduced the Greenwashing Directive to ensure transparency and honesty in environmental claims. Similarly, several countries are also addressing greenwashing. Australia has made it a top enforcement priority, with the Australian Competition and Consumer Commission (ACCC) actively pursuing companies making false or misleading environmental claims. Recently, Canada also took a significant step in combating greenwashing by introducing a new law.
Canada’s Bill C-59
Recognizing the need for stronger regulations, Canada introduced Bill C-59 in November 2023, which was passed into law in June 2024. This legislation aims to strengthen Canada’s greenwashing regulations under the Competition Act to prevent misleading environmental claims by companies. The bill introduces stricter regulations requiring companies to provide clear, substantiated evidence for their environmental claims and seeks to prevent deceptive practices that mislead consumers about the true sustainability of products, services, or brands. The legislation also encourages transparency and third-party verification, while aiming to limit “greenhushing”. This term refers to companies taking steps to remain silent about their climate strategies by either avoiding the topic or refusing to comment on it.
How Cority Can Help
Cority offers comprehensive Sustainability software and advisory services designed to help organizations ensure compliance with environmental regulations and avoid greenwashing. Cority’s solutions provide tools for accurate data collection, reporting, and third-party verification, enabling companies to transparently and genuinely demonstrate their environmental commitments. Whether you have been measuring and reporting sustainability data for years, or are just starting out, we’re ready to advise and support at every step. Learn more about how we can support you on your ESG reporting journey.
