The Greenwashing Epidemic: A Battle Against Environmental Deception 8 in 10 environmental claims are misleading or exaggerated 54% Of 48 Companies in a Sample Were Greenwashers

Consumers in India and around the world are increasingly seeking eco-friendly products due to growing environmental awareness and heightened health concerns in the present-day scenario. Companies are promoting sustainable and eco-friendly products, but the presence of Greenwashing is evident. This Greenwashing marketing tactic is misleading consumers.

What is Greenwashing?

Greenwashing refers to the practice of making false or misleading claims about the environmental benefits of a product, service, or company. This can include exaggerating the use of renewable energy, hiding harmful environmental practices, or making unsubstantiated claims about sustainability.

Prevalence of Greenwashing:

• According to a YouGov market research study, 71% of Indian consumers have reported incidents of greenwashing, and 60% of those consumers are concerned. Only 29% of consumers trust organizations’ environmental claims.
• A study by the Advertising Standards Council of India (ASCI) found that 79% of green claims made by organizations were misleading or exaggerated.
• A study by Sushobhan Sensharma, Manish Sinha, and others found that 54% of 48 companies in their sample were green washers, and most of those companies were in the manufacturing and energy sectors.

What are the Consequences?

Eroding consumer trust: Repeated instances of greenwashing can lead to consumer skepticism and mistrust of genuine sustainability efforts.

• Legal repercussions: Companies found guilty of greenwashing can face legal action, fines, and damage to their reputation.
• Missed opportunities: Greenwashing can distract from genuine sustainability efforts, hindering the transition to a more environmentally conscious economy.

Why it happens?

People fall for greenwashing because it taps into their environmental guilt and desire to make a positive impact. As concern about plastic waste and its harmful effects grows, companies use eco-friendly packaging and marketing claims to create a false sense of security, making consumers believe they are supporting sustainable practices. This emotional appeal distracts from the reality of the company’s actual environmental impact, allowing them to continue harmful practices while appearing responsible. By leveraging the emotional weight of the word “plastic”, brands exploit consumers’ good intentions, making them feel they are making a difference but, in fact, they are not.

Policies in place to deal with greenwashing practices:

• The Consumer Protection Act (2019): Prohibits false and misleading advertisements.
• Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements (2022): Identifies what does not constitute a misleading advertisement.
• Guidelines for the Prevention and Regulation of Greenwashing (2024): Aims to address the issue of unsubstantiated environmental claims made by businesses.
• The Advertising Standards Council of India (ASCI) guidelines: Titled “Guidelines for Advertisements Making Environmental/Green Claims”, these guidelines define greenwashing and offer directives and warnings for advertisers.
• Eco-labels: Symbols or certifications that signify a product or service adheres to specific environmental standards.
• The Securities and Exchange Board of India (SEBI) guidelines: Address greenwashing practices in the context of green-debt securities.

Policy suggestions to combat greenwashing:

1. Mandatory Environmental Impact Assessments

• Require companies to conduct regular, independent, and transparent environmental impact assessments.
• Make the assessments publicly available to ensure accountability.
• Set penalties for companies that misrepresent or exaggerate their environmental performance.

2. Standardized Green Claims Certification

• Establish a national certification program for environmental claims.
• Set clear guidelines and standards for companies to make green claims.
• Require companies to undergo third-party verification to ensure the accuracy of their claims.

3. Greenwashing Penalties and Incentives

• Impose significant fines and penalties on companies found guilty of greenwashing.
• Offer tax incentives, subsidies, or other benefits to companies that demonstrate genuine environmental commitment and transparency.
• Establish a publicly accessible database to track company performance and greenwashing violations.

These policies suggestions can promote transparency, accountability, and accuracy in environmental claims, and can create a level playing field for companies that genuinely prioritize sustainability.