What Exactly is Greenwashing - An Interview with Maria Zherebtsova

Companies trying to appeal to younger generations have a vested interest in being perceived as moral, socially responsible, environmentally friendly and sustainable. This is why the term ‘sustainable’ is being increasingly used deceitfully, to the point it is now being abused. With that in mind, why are so many companies ‘greenwashing’, and what exactly does the term ‘greenwashing’ mean? We asked our Investment Director Maria Zherebtsova.

What is Greenwashing and why do companies do it?

“Sustainability is not just a term, it is a fundamental point of view that shifts focus from the idea of exploitation, to the idea of co-dependency and circularity of the world we inhabit. Sustainability is one of the most important factors in modern civilization, especially as we as a planet continue to observe the detrimental effects of climate change, some of which are already irreversible. It is important for companies to be more sustainable at every stage from design, throughout their supply chains and right up to the distribution channels.

However, faced with the growing pressure from those who claim to be concerned with environment - those who are more environmentally conscious, progressive and politically engaged population - companies need to craft out their brand perceptions as being sustainable and environmentally friendly, as part of their CSR, contributing towards a positive reputation among the community, society and prospective customers.”

Greenwashing refers to the practice of making false or misleading claims about the environmental benefits of a product, service, or company in order to appear more environmentally friendly than they actually are. Essentially, it involves exaggerating or misrepresenting a company's environmental efforts or policies to appeal to prospective customers who are concerned about sustainability and the environment.

How do companies do it?

“Greenwashing can take many forms, beginning with the vague or ambiguous use of language to make claims about a product's eco-friendliness, using irrelevant, unproven or false environmental claims. For example, the term ‘biodegradable’ is a word often used to imply a product will disintegrate into tiny pieces in a landfill at the end of its lifespan. However, companies will often use this word for products that include materials that will take potentially hundreds of years to disintegrate, or products that would disintegrate in specific conditions, which could never happen on a landfill site.

“Greenwashing can also be seen in the production of fake eco-labels or certifications to mislead consumers into believing their products are more environmentally friendly than they actually are. Companies will often make impressive sounding claims about reducing energy usage, perhaps even installing renewable energy approaches, but will continue to exacerbate carbon emissions across their entire supply chain.”

“Some companies will talk more broadly about goals they’ve set such as, for example, to be ‘carbon neutral by 2035’ but when reviewed, are actually nowhere near on track to achieve their purported ambitions. Targets are often even more meaningless - for example, Nestle’s claim in 2018 to be ‘100% recyclable by 2025’ with no plan whatsoever on how to get there. In 2020, Nestle was the third biggest polluter of plastic behind Coca-Cola and PepsiCo, according to the Break Free from Plastics Annual Report 2020.

What are the implications of greenwashing?

“The obvious answer is, of course, the company is failing to contribute towards sustainability, and playing their part in protecting the environment and people’s lives. In truth, many companies simply want to avoid the time, effort and cost of being sustainable, morally conscious and environmentally friendly. However, given that greenwashing is primarily to influence public perception, the implications are also to people.”

“Greenwashing misleads consumers into thinking they are making a positive environmental choice when in reality, they may actually be contributing to environmental degradation. It can also undermine the efforts of genuinely eco-friendly companies by making it more difficult for consumers to distinguish between truly sustainable products and those that are simply using greenwashing as a marketing tactic.”

“The implications for the companies themselves can be equally damaging. Credibility is lost among consumers, investors, and stakeholders when companies are discovered to be purposefully deceitful in their sustainability claims. Companies that engage in deceptive marketing practices can also face legal consequences, such as fines, lawsuits, and damage to their reputation.”

“Chinese fashion juggernaut Shein have also caused a stir with their ambitions to IPO soon, despite massive concerns over their unsustainable production processes in regards to their materials and energy usage, the culture around ‘ultrafast’ fashion and, more significantly, the alleged mistreatment of Uyghur workers in China, including claims of some workers being underpaid or unpaid completely. US lawmakers have threatened to crack down on Shein based on the company’s practices, and their overall ethos to manufacturing.”

How does personalised shopping contribute towards sustainability?

“On one hand, personalised shopping and manufacturing can help to reduce waste and promote sustainability by producing products that are designed to last longer and meet the specific needs of the consumer. For example, a custom-made piece of clothing that fits perfectly and is made from high-quality materials is likely to last longer and be worn more frequently than a mass-produced garment that is poorly made and ill-fitting.”

“On the other hand, personalised shopping and manufacturing can also lead to overconsumption and unsustainability. Consumers may be tempted to purchase more products than they need, simply because they are customised to their liking. Additionally, personalised manufacturing can require a significant amount of resources, such as energy, water, and raw materials, which can contribute to environmental degradation if not managed carefully.”

What does true sustainability look like?

“Companies should seek to prioritise sustainability in their manufacturing processes by using eco-friendly materials, minimising waste, and reducing their carbon footprint. This means ensuring their entire business operations are as environmentally friendly as possible. Products themselves should be designed to be sustainable, durable, and repairable, with the aim of minimising waste and promoting longevity. Companies should be truthful and transparent with their operations. Honesty in sustainability fuels eco-friendly development and adoption, for companies and consumers across the board.”

“A perfect example of this ethos would be material science company Balena. The Israeli based startup is a material science company, developing advanced compostable, recyclable, and bio-based thermoplastic materials, on a mission to create a circular model for durable consumer goods. Their recent product releases, while personalisable, are manufactured and marketed to last and not to encourage repeat purchases. Their overarching focus is to produce a holistic biocycling solution to manufacturing.”

“It’s worth noting however, that consumers must also take a better look at their behaviours, rather than simply buying into the hype of sustainability and the intrinsic moral-fueled reasons why purchase from certain companies, and not others. We, as consumers, must understand the true nature of circularity, and what that really means in regards to the products we purchase and the companies we buy from. If sustainability is so many individual’s moral code which dictates consumer behaviours, we need to fully understand what this means. As Olivia Firth, Founder and Director of Eco-Age says “the word sustain suggests we should benchmark exactly where we are, and we keep things exactly at that level, but the truth is, we can’t do that anymore.” Companies and consumers should actually be focussed as much on ‘degrowth’ as they are sustainability - the aim in reducing non-essential production and consumption. Reliance more on circularity is the way we are best positioned to reach this. After all, finite resources cannot sustain infinite growth.