- The global sustainability movement has grown in power and force in recent years, but alongside that rapid ascent has come an equally booming side effect – corporate greenwashing.
- Our analysis found that the use of the term “greenwashing” has been steadily growing across media outlets, presenting serious reputational challenges, with companies from the energy and financial services sectors being most commonly referenced.
- We suggest that PR and comms could avoid greenwashing accusations by owning their shortcomings instead of masking them, while promoting sustainable lifestyles in general, not just when it comes to their products and services.
If you work in PR and comms, there’s no way you haven’t come across “greenwashing” – a form of messaging spin in which green PR and green marketing are allegedly used solely to convince the public that an organisation’s products, aims and policies are environmentally friendly. You don’t have to scour the news too hard to find reports analysing the prevalence of this. Being blamed for greenwashing is quickly becoming a new crisis management concern across industries.
Accusations of corporate hypocrisy have been a well-established weapon in the arsenal of environmental NGOs for some time, but, over the past year, activist groups have been harpooning companies and entire industry sectors with ever more frequent anti-greenwashing campaigns. It goes without saying that this should be a significant concern for industries, as well-substantiated accusations of greenwashing do not just shed unwanted light on instances of unsavoury or unsustainable practices. They are also a quick and efficient way to damage public trust in a company, sowing seeds of doubt around the sincerity of wider climate pledges and ESG drives.
And greenwashing allegations are not only directed towards well-known polluters like the fashion or oil industries. Even brands that orientate their operations around sustainability can find themselves under fire, such as Oatly, the alternative milk brand, recently accused of misleading consumers and investors about its sustainability practices.
In recent months, the role of PR firms and ad agencies in greenwashing has come under intense scrutiny, with communications firms accused of obstructing climate action by spreading disinformation on behalf of their clients. For instance, a peer-reviewed study published late last year in the journal Climatic Change was the first to comprehensively document the role that PR firms have played in helping the world’s most profitable oil and gas companies improve their environmental image and block climate action. The widely-publicised study showed that energy giants have relied on PR firms and ad agencies to finesse their public messaging for more than three decades.
So, as increased public awareness of environmental issues in key markets drives companies to make bolder claims around their green credentials, organisations from a range of industries have found themselves in hot water over attempts to capture the environmental mood. Given the serious and escalating risk posed by anti-greenwashing campaigns, it is vital that PR and comms pros stand ready to steer their ship away from any greenwashing icebergs.
Greenwashing accusations became trendy
The term greenwashing was coined by New York environmentalist Jay Westerveld in a 1986 essay about the hotel industry’s practice of placing notices in bedrooms promoting the reuse of towels to “save the environment”. He noted that often little or no effort toward reducing energy waste was made by these institutions, although towel reuse saved them laundry costs. He concluded that often the real objective was increased profit, and labelled this and other profitable-but-ineffective “environmentally-conscientious” acts as greenwashing.
But the term greenwashing started gaining traction quite recently, as we found in our media analysis:
The media’s interest in greenwashing took off in 2019 when McDonald’s introduced paper straws that turned out to be non-recyclable. In 2020, the concept started worrying regulators, with several securities watchdogs calling for European Union rules to prevent greenwashing.
And in 2021, greenwashing became a legal issue, as New York City sued Exxon, BP and Shell along with the American Petroleum Institute for “systematically and intentionally deceiving New Yorkers” on climate change issues. Specifically, the suit alleged oil companies have used “greenwashing campaigns” directed at NYC consumers to falsely present themselves as corporate leaders in the fight against global warming.
Later that year, greenwashing was a big topic in the media conversation around COP26. Hundreds of thousands of activists gathered in Glasgow, where the 26th United Nations climate conference took place, to demand more immediate and drastic action on climate change. Amongst these protesters was Greta Thunberg, who repeatedly referred to COP26 as a “greenwashing” event.
In 2022, the media debate became even more dynamic as many NGOs continued to scrutinise the ESG commitments of big corporations. For example, a widely-covered analysis, published by non-profit organisations NewClimate Institute and Carbon Market Watch, found the headline climate pledges of most major multinational firms cannot be taken at face value. The study found that the climate pledges of the world’s largest companies plan to reduce absolute carbon emissions by just 40% on average, not 100% as suggested by their net-zero claims.
Energy and finance in the greenwashing spotlight
Analysing 1,872 English-language articles published in top-tier outlets in the last two years, we found that the greenwashing conversation has been gravitating around the Energy industry:
As oil companies are under increasing pressure from investors to align their businesses with climate targets, their plans have faced scepticism, prompting researchers to conduct study after study into their integrity. And accusations of greenwashing against major oil companies that claim to be in transition to clean energy are well-founded, according to the most comprehensive study to date, released in February 2022 in the PLOS One journal and met with significant media attention. Numerous previous studies have shown there are already more reserves of oil and gas and more planned production than could be burned while keeping below the internationally agreed temperature target of 1.5C.
In the meantime, the past several years have seen major Financial Services institutions talking a big game about combating climate change, while a growing number of critics have said that these are more examples of companies exercising greenwashing strategies. Concerns over greenwashing and the impact of ESG funds have been an ongoing conversation but have not stopped the market growing rapidly. The global value of outstanding ESG funds rose to $4.2trn as of Q2 2021, according to data from Refinitiv Lipper, and has more than doubled since 2017.
A report released last year by the Rainforest Action Network showed that big banks that have issued new “green investment” opportunities – including JP Morgan, Citibank and Bank of America, Wells Fargo, Barclays, Bank of China, HSBC, Goldman Sachs and Deutsche Bank – were still lending enormous sums to the industries that contribute the most to global warming while boasting that they’re the leaders of the green transition.
And as pressure builds to reduce greenhouse gas emissions across the agri-food chain, and consumer demand grows for environmentally friendly products, greenwashing threatens to undermine shoppers’ trust. In turn, a portion of the media debate focuses on the Food & Drink sector, where one of the top-trending news was that the UK’s Environment Agency plans to establish standardised metrics to measure the environmental performance of the sector in an effort to tackle greenwashing practices. The initiative aims to help manufacturers to more effectively communicate their environmental performance to the public, minimising the opportunity for greenwashing.
Fashion brands also have a habit of advertising their green initiatives widely, despite it being a tiny part of their operations – according to the fashion nonprofit ReMake, 80% of discarded textiles globally are incinerated or landfill-bound, with just 20% being reused or recycled. For example, H&M launched its own line of “green” clothing titled “Conscious.” The company claims to use “organic” cotton and recycled polyester but was then criticised by the Norweigian Customer Authority for “misleading” marketing of their Conscious Collection because “the information given regarding sustainability was not sufficient, especially given that the Conscious Collection is advertised as a collection with environmental benefits.”
The Automobile industry featured in the debate mainly because of the fact that hybrid vehicle sales skyrocketed in Europe during the first quarter of 2021, prompting many critics to question whether they are actually sustainable and good for the environment. A collaborative study by the European Federation for Transport and Environment and Greenpeace has found that CO2 emissions from plug-in hybrid vehicles are up to 2,5 times greater than official tests and manufacturer marketing suggests. Perhaps, then, it’s little surprise that influential environmental think-tank Transport & Environment (T&E) is accusing car-makers of “greenwashing” and saying that they’re simply not pushing hard enough to meet the European Union’s targets of reducing emissions from transport and switching cars to electric power.
Shell and BlackRock top the charts
We used Commetric’s proprietary ‘media conversation impact score‘ metric to identify the organisations with the biggest impact on the media discussion around greenwashing in our research sample.
We determine an organisation’s media impact in the context of a topic by looking at its media influence score calculated in terms of coverage by high-profile media outlets, topic relevancy score measuring its contextual relevance, and media visibility as measured by the number of mentions.
We found that Shell, BP and Exxon were among the most influential companies in the debate:
These energy companies received that much media attention primarily because of the aforementioned PLOS One study released in February this year. The research, which was covered in many mass media outlets, examined the records of ExxonMobil, Chevron, Shell and BP, which together are responsible for more than 10% of global carbon emissions since 1965.
The study found a sharp rise in mentions of “climate”, “low-carbon” and “transition” in annual reports in recent years, especially for Shell and BP, and increasing pledges of action in strategies. But concrete actions were rare and financial analysis revealed a continuing business model dependence on fossil fuels along with insignificant and opaque spending on clean energy.
Chevron and ExxonMobil were “laggards” compared to Shell and BP, the researchers said, but even the European majors’ actions appeared to contradict their pledges. For example, BP and Shell pledged to reduce investments in fossil fuel extraction projects, but both increased their acreage for new exploration in recent years. Furthermore, the analysis found Shell, BP, and Chevron increased fossil fuel production volumes over the study period.
`Shell emerged as the most prominent company in our research sample because it received additional negative publicity last year when activists from 12 EU countries blocked its main port in Rotterdam, the Netherlands, to protest against the oil corporation’s greenwashing ads. The protest marked the launch of a new climate campaign demanding a ban on all fossil-fuel adverts in Europe. Much like the smoking ban on tobacco products in many European countries, the campaign wanted to remove all examples of oil or gas companies using publicity to legitimise their harmful activities.
Recently, ExxonMobil came under fire for advertising that suggested that its experimental algae biofuels could one day reduce transport emissions, while it has no company-wide net-zero target and its 2025 emission reduction targets do not include the vast majority of emissions resulting from its products.
And fossil fuel giant BP changed its name to Beyond Petroleum and publicly added solar panels on its gas stations, which prompted an environmental group called ClientEarth to lodge a complaint against BP for misleading the public with its advertisements that focused on BP’s low-carbon energy products, when more than 96% of its annual spend is on oil and gas.
The most prominent financial services firm in our research sample was BlackRock, the world’s largest money manager, which has been accused of greenwashing its investment activities in a report that claims the company has as much as $85bn (£62.1bn) invested in coal. NGOs Reclaim Finance and Urgewald claimed that BlackRock has $85bn of money invested in companies on the Global Coal Exit List. The list, compiled by German group Urgewald, details companies around the world that have some sort of exposure to the coal industry.
The report’s findings came a year after BlackRock chief executive and chairman Larry Fink wrote to clients saying sustainability would be the firm’s “new standard for investing.” Since then, BlackRock has ditched all its actively managed investments in companies that make more than 25% of their money from coal and added a raft of new ESG fund options for clients to invest in. Investments in “sustainable” assets are up 41% on 2020, BlackRock says, and the company has pressed hundreds of companies to come up with green plans for the future. However, Reclaim Finance and Urgewald said BlackRock wasn’t going far enough or fast enough. Lara Cuvelier, a sustainable investment campaigner at Reclaim Finance, said Fink’s letter amounted to greenwashing.
The second most prominent financial institution, Goldman Sachs, was under fire as its fund aimed at fossil fuel divestment, Just Capital, was accused of misleading shareholders because it involved fossil fuel firms. Commentators noted that even if Goldman irons out its glitches in Just Capital, the larger problem remains that big banks have many avenues of capital and hands in many different cookie jars.
Activists also accused Barclays of bankrolling multibillion-pound deals that expanded the fossil fuel industry last year despite the bank vowing to act on climate change. The UK bank last year participated in deals that arranged $97.6bn (£70.6bn) of loans and bonds for eight of the world’s largest oil and gas companies, BP, Chevron, Eni, Equinor, ExxonMobil, Repsol, Shell and Total, despite promising to shrink its carbon footprint to net-zero by 2050, according to climate campaigners Market Forces.
Meanwhile, NewClimate Institute has released a report accusing Nestlé and Unilever of putting out ‘ambitious sounding’ carbon goals that have ‘very low integrity’. The food giants were quick to defend their records on climate action while also stressing their commitment to transparency and external scrutiny. For example, Benjamin Ware, Global Head of Climate Delivery & Sustainable Sourcing at Nestlé, was cited as saying that NewClimate Institute’s work ‘lacks understanding of our approach’ and ‘contains significant inaccuracies’.
Another food & drink giant, Coca-Cola, was sued by environmental organisation Earth Island Institute in June 2021 for falsely advertising that it is sustainable and eco-friendly despite being the largest plastic polluter in the world. the company is adamant that it is making progress in tackling packaging waste, but it came under fire when it announced that it would not abandon plastic bottles, saying that they were popular with customers.
The most influential automobile company was Volkswagen, which was mentioned as a classic example of greenwashing when it admitted to cheating emissions tests by fitting various vehicles with a “defect” device, with software which could detect when it was undergoing an emissions test and altering the performance to reduce the emissions level. This was going on while to the public the company was touting the low-emissions and eco-friendly features of its vehicles in marketing campaigns. In actuality, these engines were emitting up to 40 times the allowed limit for nitrogen oxide pollutants.
The only furniture company in our sample, IKEA, was considered a beacon of a major corporation being sustainable before June 2020 when the furniture retailer was linked with illegal logging in Ukraine. In a report by NGO Earthsight, the wood certification scheme IKEA uses, Forest Stewardship Council, was described as an organisation that greenwashes the timber industry. It was accused of failing to catch IKEA’s sourcing of conflict wood, and act on it.
Commentators worry whether ESG is greenwashing
We also found that Tariq Fancy, former global chief investment officer for sustainable investing at BlackRock, was the most influential spokesperson in the debate:
Tariq Fancy made headlines last year when he said ESG investing too often boils down to little more than “marketing hype” and “disingenuous promises.” Fancy, who now runs an education technology non-profit, told the FT: “I do think there will be more scandals to appear, and it’s going to come to light soon.”
He also made waves recently with a 40-page essay criticising ESG investment products. He argued that ESG-labelled investment products overstate their impact and that market-led solutions were a distraction from more effective government-led ones. His key criticisms target ESG-labelled funds, and question the impact of funds that use ESG screening to dump investments in companies with poor ESG performance.
Similarly, as assets under management in ESG funds have boomed, Ashley Alder, chair of The International Organization of Securities Commissions, was quoted as saying that concerns have emerged “about the consistency and comparability of sustainability-related information and greenwashing”.
The second most influential commentator, Bob Brulle, Visiting Professor of Environment and Society at Brown University in Rhode Island, was quoted in several reports on the energy industry as saying that over the past thirty years, the major oil companies have ramped up their PR activities whenever it appears that the government is considering regulation of their activities.
Some environmental activists also gained their influence by commenting on regulations that allegedly amount to greenwashing. For example, as Greenpeace activists from Greenpeace Belgium covered the entrance of the European Parliament in Brussels in green-coloured water last year, Marco Contiero, agriculture policy director at Greenpeace EU, accused the politicians inside the building negotiating the EU’s common agricultural policy (CAP) of greenwashing.
Other environmental activists were cited as warning that the finance sector should not be allowed to set its own rules – for example, David Barmes, an economist with pressure group Positive Money, noted that “more voluntary alliances filled with repeat greenwashing offenders is not enough,” and that “we need urgent action from regulators such as central banks to ensure that the entire financial system is aligned with the legally binding environmental targets governments have committed to.”
According to some comms professionals, a revamp of advertising could help promote the message that change is possible and popularise low-carbon choices. For instance, Solitaire Townsend, co-founder of Futerra, a creative agency focused on sustainability, was quoted as saying that traditional marketing, which focuses on “selling more crap to more people”, needs to give way to advertising that helps that new generation of more climate-conscious consumers make smarter choices.
How can PR and comms avoid greenwashing accusations?
So, how do marketers help drive critical ESG practices within their organisations and educate and inspire consumers and investors while avoiding greenwashing?
The obvious answer is to make sure that there is no discrepancy between what you are saying and what you are doing. But beyond that, there are a couple of things `that suggest themselves from our analysis:
- Be detailed to be credible. Companies can be accused of greenwashing simply out of flawed communication. Labelling anything and everything you do as “environmentally friendly”, “eco-friendly” or “green” can backfire if you don’t back up these claims with real attributes and outcomes. Today, these terms are used so often that people hardly notice them – and may consider them shallow, meaningless words unless you are able to explain exactly why your product has a reduced impact or how much CO2 it avoids. Try replacing catchphrases or slogans with some simple but measurable details, supported by facts and data: your audience will come away with a better understanding of your efforts, and you will have planted a seed of trust in them. An environmental claim must be transparent and properly defined. Vague or general terms with multiple meanings should be clearly explained.
- The time for pledges is over – demonstrate some action already. Facing a reckoning over their contribution to the climate emergency, companies are coming out with a record number of pledges. At least a fifth of the world’s 2,000 largest public companies have now made some kind of “net zero” pledge to cancel out their carbon emissions. But climate action pledges are no longer sufficient, and corporations are losing the ability to “fudge the numbers” on climate policies. Business must show, not tell. Moving forward, the focus will be on clear, understandable pathways and actionable execution of decarbonisation strategies. If offsetting emission, be prepared to explain why it’s the only option possible. If announcing a net zero target, be prepared to communicate the specifics of how you’ll get there — clearly, transparently, and consistently over time. Companies should understand that they’re losing their grip on the public relations hit of announcing a climate ambition and then doing nothing about it.
- Never follow a trend for trend’s sake. With everyone from global trend-hunting firms to social media influencers telling us we cannot miss out on the latest fad, it is easy for a company to be led astray or get carried away. While understanding trends can be vital for your business, it is essential to keep an analytical eye on the trend and be well informed: among the ever-evolving hype, a corporate sustainability strategy should strive to maintain core principles as a main direction, even when adopting different product solutions. Choose the solution that really fits your company strategy, your customers’ needs and preferences, and the market’s legislative context. Because developing the right product can take months or even years, while trends change in unpredictable ways – and sometimes disappear overnight.
- Instead of masking your shortcomings, own them. Now that everyone has a platform, brands can no longer get away with spin and deception to boost their image with customers, investors or employees. If as a brand you are called out for greenwashing, make sure your response is respectful of those making allegations against you; show you are taking clear steps to investigate and rectify any potential issues; and follow up your response with action. Instead of masking your shortcomings as a company, you should own them. Be the first to call out where you are failing and then publicly make a plan to address these areas and monitor and measure your performance. Being transparent, open and honest with consumers, employees and investors goes a long way to building trust and preventing a backlash or fallout later down the line.
- Promote sustainable lifestyles in general, not just when it comes to your company. Headline climate pledges can often sound like just the latest PR exercise – and there’s nothing worse than your PR efforts being perceived by the public as PR efforts and nothing more. Change often starts at a local level where the people and places we interact with are critical factors in how we live our lives. Community action can also be a major driver in bringing about positive change with wide-ranging co-benefits. In order to achieve their ESG objectives, companies will need to engage with all corners of society, using trusted messengers to reach different audiences in new and innovative ways. They also need to draw more attention to the need for climate change adaptation and resilience, building greater public understanding of climate risks in an increasingly changing world. This will help consumers understand that your company is committed to sustainability as a whole, not just when it comes to promoting your products or services.