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How Greenwashing Works

        Money | Money & Ethics

Forms of Greenwashing
Boeing UK was accused of committing the third sin of greenwashing: making vague claims about environmental advances.
Boeing UK was accused of committing the third sin of greenwashing: making vague claims about environmental advances.
Scott Barbour/Getty Images

Corporations, businesses and even governments spend a lot of money to make themselves appear greener in the public eye. While many environmental claims are legitimate, it's considered greenwashing when the claims are false or presented in a deceptive manner. TerraChoice Vice president Scot Case identified six ways companies greenwash their customers and investors in his report, "The Six Sins of Greenwashing."

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  1. Hidden tra­deoffs The most common form of greenwashing accounts for 57 percent of cases. It occurs when a company makes a positive environmental claim about a product, but fails to mention larger negative factors. The bad outweighs the promoted good, leaving the consumer with an unbalanced view of the environmental impact. Example: Many companies make claims about recycled paper content but don't account for paper production's negative effects like air and water pollution.
  2. Lack of proofAccounting for about 26 percent of cases, this type of greenwashing happens when a company makes environmental claims that can't be easily verified with data or through a third party. Example: Critics have lashed out at companies such as SC Johnson for self-verifying environmental claims. The company gives products like Windex "Greenlist" certification -- a distinction handed out by SC Johnson itself rather than an independent third party [source: Treehugger]. ­­Environmentally-charged consu­mers are also pouring more money than ever into carbon offsets -- $54 million in 2007 [source: Adweek]. However, academics and members of the United States Federal Trade Commission question the effectiveness of some carbon offset programs and call for stricter regulations.
  3. Vague claims This type of greenwashing accounts for 11 percent of examined cases and occurs when companies make environmental claims that are too vague or broad to be understood by consumers. Example: Boeing UK was bombarded with complaints in 2007 for a print advertisement claiming its 747-8 International passenger plane produced "less than 75 grams CO2 per passenger kilometer." Britain's Advertising Standards Authority faulted Boeing UK for basing its figures on 100 percent occupancy when the British government uses a standard 79.9 percent occupancy in calculating airliners' CO2­ emissions [source: Guardian].
  4. Irrelevant claims Coming in at a narrower four percent of examined cases, this type of greenwashing occurs when companies make claims that might sound good on the surface but are ultimately pointless. Example: Advertisements will sometimes claim that a product is free of chlorofluorocarbons (CFCs), an ozone-depleting chemical compound once found in refrigerants and propellants. Because CFCs have been banned for years, this once noteworthy claim no longer has relevancy.
  5. The lesser of two evils Accounting for an estimated one percent of cases, this type of greenwashing involves claims that are not only irrelevant but have questionable ecological significance to begin with. Example: Organic cigarettes and environmentally friendly pesticides are often marketed as being better for the environment than traditional products. However, critics charge that consumers are usually better off reducing the use of the advertised product than purchasing a green version.­
  6. Outright lies This category, accounting for less than one percent of reported cases, involves companies that make false claims about a product or falsely cite green certifications. ­ ­Example: Several major Japanese paper companies, including the nation's largest paper manufacturer, Oji Paper Company, admitted to falsifying the amount of recycled paper used in their products. Oji claimed it used 40 percent recycled content in heavy paper but used no recycled content at all [source: Yomiuri Shimbun].

Now that we know how companies greenwash, we'll find out why they do it and what greenwashing costs consumers, businesses and the environment.

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