Greenwashing, a term coined in the 1980s, refers to the act of misleading consumers by falsely promoting a product, service, or company as environmentally friendly. It involves exaggerating or making false claims about sustainability initiatives, eco-friendly practices, or green credentials. 

This deceptive marketing tactic leads consumers to believe they are making a positive environmental choice when, in reality, they may be supporting companies that harm the planet.

Greenwashing undermines genuine efforts towards sustainability and misleads consumers seeking sustainable solutions. The good news is that both the US and EU are taking steps to tackle this issue head-on. 

Impact of Greenwashing

The impact of greenwashing is far-reaching and affects various stakeholders, including consumers, companies, and the environment.

Greenwashing preys on consumers’ desire to make conscious choices for the planet. False claims mislead and deceive individuals who genuinely want to support sustainable products and services. This deception erodes trust and discourages consumers from making informed decisions.

When companies engage in greenwashing, it undermines genuine sustainability efforts. Legitimate businesses investing time, resources, and capital in implementing sustainable practices may find themselves overshadowed by companies that merely make false claims. Greenwashing not only misleads consumers but also hampers progress towards a greener future. By supporting companies engaged in deceptive marketing practices, consumers inadvertently contribute to environmental harm. This perpetuates unsustainable practices and slows down the transition towards a more sustainable economy.

Existing Greenwashing Regulations

Before delving into the new regulations aimed at combating greenwashing, it is crucial to understand the existing regulatory framework surrounding false environmental claims.

Federal Trade Commission (FTC) Greenwashing Guidelines (US)

In the United States, the FTC plays a crucial role in regulating deceptive marketing practices, including greenwashing. The FTC’s Green Guides provide guidance to businesses on how to avoid making deceptive environmental claims. However, these guidelines are not legally binding and are often criticized for their lack of specificity. To learn more, here’s a link to the FTC site

Recognizing the need for stricter regulations to combat greenwashing effectively, the United States is taking steps to enhance transparency and hold companies accountable.

The Stop Greenwashing Act

Introduced in 2021 by Senator Tom Udall, the Stop Greenwashing Act aims to establish legal definitions and penalties for greenwashing. If passed, this legislation would empower the FTC to regulate deceptive environmental claims more effectively.

In addition to new legislation, there have been calls to strengthen the FTC’s Green Guides. Advocates argue for clearer definitions of terms such as “recyclable,” “biodegradable,” and “carbon-neutral” to prevent companies from making unsubstantiated claims. The US government is exploring ways to allocate additional resources to the FTC for investigating and penalizing companies engaged in deceptive marketing practices.

International Organization for Standardization (ISO)

The ISO has developed several standards related to environmental labeling and claims. ISO 14020 series provides principles and guidelines for environmental labels and declarations. These standards help businesses provide accurate and verifiable information about their products’ environmental impact.

New Greenwashing Regulations in the European Union

The European Union is also taking significant steps towards combating greenwashing and promoting transparent communication regarding environmental claims.

The Sustainable Products Initiative (SPI)

The SPI is part of the European Green Deal and aims to make products placed on the EU market more sustainable. It includes measures such as developing clear sustainability criteria, introducing mandatory labeling schemes, and addressing false environmental claims.

The European Green Claims Initiative

The European Commission plans to introduce a legislative proposal for the European Green Claims Initiative by 2022. This initiative will establish harmonized rules for substantiating and verifying environmental claims made by companies operating within the EU.

The Single Market for Green Products Initiative

The Single Market for Green Products Initiative aims to establish a harmonized EU-wide framework for assessing and labeling products’ environmental performance. This initiative will help consumers make informed choices by providing reliable information about a product’s sustainability credentials.

In addition, in 2023 the European Council and Parliament reached a provisional agreement on a new EU directive to ‘empower consumers for the green transition’. Key features of the new rules include the following:

    • Ban on Unsubstantiated Generic Environmental Claims, Such as ‘Climate Neutral’

      The new directive will update the current list of commercial practices that are banned in the EU to include generic environmental claims – such as “environmentally friendly”, “natural”, “biodegradable”, “climate neutral” or “eco”, without proof of recognized excellent environmental performance relevant to the claim.

    • Ban on Unverified Claims Based on Emissions Offsetting Schemes

      Unverified claims that suggest a product has a neutral, reduced or positive impact on the environment also will be banned.

Industry Greenwashing Efforts

While regulatory measures play a crucial role in combating greenwashing, industry-led initiatives also contribute to promoting transparency and sustainability.

Third-Party Sustainability Certifications

Many companies voluntarily seek third-party certifications to verify their sustainability claims. Certifications like B Corp, LEED, and Fairtrade provide independent assessments of a company’s environmental practices and help consumers identify trustworthy brands.

Supply Chain Transparency

Companies are increasingly focusing on supply chain transparency to ensure that their sustainability claims are genuine. By mapping their supply chains and working with suppliers committed to sustainable practices, businesses can provide more accurate information about their products’ environmental impact.

Consumer Greenwashing Education

Educating consumers about greenwashing and providing them with tools to identify false claims is crucial. Companies are investing in consumer education campaigns to raise awareness about deceptive marketing practices and empower individuals to make informed choices.