How to avoid the greenwashing trap – a simple guide

Get the low down on greenwashing, what it means for your business and how to avoid it.

What is greenwashing?

Greenwashing is when a company makes itself out to be doing more to protect the environment than it really is.

Sometimes it occurs when a company spends more money on marketing its green credentials than on action. On other occasions it occurs when a company selectively promotes examples of its good work, but avoids mentioning other less-than-ideal practices.

Often, greenwashing occurs as a result of good intent, but lack of knowledge.

Why does it matter?

Regardless of intent, greenwashing can incur big fines. Even if you’re not fined, you can incur significant brand damage through negative publicity. That can take years to claw back.

What does the law say?

In Aotearoa New Zealand, the Fair Trading Act makes it illegal for businesses to mislead or deceive. It requires businesses to make sure the information they share is accurate and that they don’t withhold important information.

The Commerce Commission is responsible for enforcing the Act. The Commission relies on people reporting instances of companies breaking the rules.

There are serious penalties for breaching the Fair Trading Act – companies can be fined up to $600,000 and individuals up to $200,000. Even receiving a warning, rather than a fine, can be very damaging to business reputation.

Have any companies been found guilty of greenwashing in Aotearoa New Zealand?

Yes. Fujitsu had the dubious honour of being the first company to be fined for greenwashing in Aotearoa New Zealand. It was fined $310,000 in 2017 for making unsubstantiated or misleading claims about the energy efficiency of heat pumps. This included statements such as “New Zealand’s most energy efficient heat pump range”, when that could not be backed up.

Many other companies have been issued warnings about greenwashing. They include Glopac, which claimed its hot drink cups were recyclable, even though they were not accepted by recyclers in Aotearoa New Zealand.

In 2022, the Financial Markets Authority said that KiwiSaver funds calling themselves ethical were falling short of their claims. The increasing popularity of ethical investing had led to many funds promoting themselves as ethical, without significant changes to how they operate.

Why is there such a fuss about it right now?

A growing number of people are on the greenwashing warpath and media coverage is ballooning. Trust and transparency matter a lot to people. If they think you’ve been misleading them they’ll call you out. It’s not difficult to find information online, so if you slip up with public statements you can be found out. Those mistakes could quickly go viral.

Publicity about companies misleading consumers is growing, as is the number of potential products or services falling into the greenwash trap. An investigation by Consumer NZ in March 2023 found a number of products for sale on supermarket shelves had misleading or inaccurate sustainability claims.

Even global giants are falling foul of greenwashing. H&M tried to tap into growing consumer interest in sustainability by using an environmental scorecard on its products. But an investigation in 2022 found more than half of the scorecards portrayed products as better for the environment than they actually were. In one case, a dress was marketed as being made with 20% less water than average, when an investigation found it was made with 20% more water. H&M was sued and received damning publicity as a result.

A review of websites worldwide in 2021 found that 40% of companies’ green claims could be misleading.

Greenwashing is rife.

How can my business avoid greenwashing?

Follow the advice of the Commerce Commission: “If you make environmental claims, they must be accurate, scientifically sound and substantiated."

Here are some tips:

Be honest and transparent. Communicate clearly and truthfully about the environmental impact of your products or services.
Be specific. Don’t use vague words like ‘green’, ‘eco-friendly’, ‘good for the planet’ or ‘natural’. For example, if you claim your product is ‘recyclable’ but it can only be recycled in limited areas, you risk breaching the Fair Trading Act. It would be more accurate to say ‘recyclable in some areas’. According to Pulsar, the words most commonly associated with greenwashing are ‘green’, ‘eco’ and ‘carbon’.
Avoid misleading imagery. Ditch fluffy pictures such as pretty leaves, an Earth or a green tick that may imply a product is better for the environment than it really is.
Consider certification. Reputable third-party certifications such as Fairtrade, BioGro Organic or B Corp can give consumers confidence that a product or service meets certain criteria. Check out the main sustainability certifications used in Aotearoa New Zealand.
Substantiate claims. Make sure you can verify claims with independent, easily accessible evidence.
Use plain language. Avoid jargon and use words people can easily understand.
Don’t exaggerate. Don’t be selective in the information you share. Look at the whole picture, including the entire life cycle of a product or service.
Set goals. Set specific, measurable and verifiable sustainability goals and report on them.
Check your supply chain. Are you inadvertently supporting poor practices through the businesses you buy from? Check out Docket, a free online toolbox to help you assess the sustainability of your business and your suppliers.

If you can’t back it up, don’t say it.

Is it safer to avoid saying anything at all about sustainability?

A new term has been coined for businesses that don’t talk about their sustainability actions for fear of being accused of greenwashing. It’s called ‘greenhushing’, but that could be harming your business too.

People want to know about the good companies are doing. If you say nothing at all, you could be missing out on sales. Taking sustainability actions is good for many reasons – for people, the planet and business.

Research last year by consultancy South Pole found that one in four companies that had set science-based targets didn’t publish information about those targets on their websites or reports.

South Pole’s chief executive Renat Heuberger called this trend towards greenhushing concerning. He said: “The speed at which we are overshooting our planetary boundaries is mind-blowing. More than ever we need the companies making progress on sustainability to inspire their peers to make a start. This is impossible if progress is happening in silence.”

What’s the best way to talk about sustainability?

Before you even start talking about sustainability, you need to have a sustainability plan in place and be taking meaningful action. Only then will you be ready to share your journey.

Be honest. No company is perfect and people don’t expect you to be. What they do expect is for you to be making progress and to have genuine intent. They will respect you for sharing your shortcomings, so long as you have a plan underway to address them.

Once you have a plan and are acting on it, start reporting on your progress. That way you can monitor successes as well as challenges.

The risk of so much coverage of greenwashing is that companies will be afraid to share their good work, for fear of criticism for what they’re not doing, or worse – being reported for breaching the law. Yet sharing progress, even small steps, is vital to the system change we so urgently need. Communicating sustainability initiatives is an essential part of progressing sustainability itself.

To get the balance right and to avoid greenwashing and greenhushing, what can help is greater collaboration between communication/marketing professionals and sustainability professionals. Both have essential roles to play in advancing sustainability, yet neither can do it alone.

Finally, if I spot greenwashing, how can I call it out?

You can report suspected greenwashing to the Commerce Commission (for breaches of the Fair Trading Act), Advertising Standards Authority (for breaches of the Advertising Standards Code) or Financial Markets Authority (for breaches of the Financial Markets Conduct Act).

The Commerce Commission may issue a warning and in significant cases it can take a company to court for breach of the Fair Trading Act.

You can also tell Consumer NZ. The organisation is running a campaign to end greenwashing and is calling for an independent investigation of greenwashing claims and new regulations.