G’day mate,

Welcome to our July newsletter for 2023. This month we are talking about greenwashing, sorting the laundry of blue, black, purple, and even rainbow washing. 

Consumers are increasingly taking note of the misleading marketing tactics employed to present products, and even companies, as environmentally friendly or sustainable.

Now Regulators around the world are taking note as well - and beginning to invoke significant penalties on the most egregious washing practices and Sustainability claims. Consumer and Regulator actions are reshaping the business landscape, driving genuine change. The goal is to create a global environment where Sustainability is not just a buzzword, but a tangible commitment to doing better.

Increasingly, supply chains will need to adapt to incorporate solid ESG credentials. Read on to learn how Down Under is helping our customers with tangible sustainability evidence to support their product claims.

Read on:

•   Mind the "Green Gap"

•   ESG Washing: Sorting the Colors 

•   Take the Spot the Greenwashing Quiz

•   Regulators Narrow the Gap

•   Traceability - the New Clean

•   Your Green Claims, Our Evidence 
  

Enjoy!

Phil Prather

FEATURED "PRODUCT"

Mind the green gap

Greenwashing refers to the deceptive marketing practices companies employ to portray themselves as environmentally friendly or sustainable. While in reality, their actions may not align with their claims. Regulatory bodies and governments worldwide have recognized the need to address greenwashing and vague Sustainability claims, taking a firm stance to prevent such information from misleading consumers and investors.

Pressured to “greenwash”?

Cone Research (2019) found that 83% of Americans said they feel better about companies making bold environmental commitments, and 39% said they had researched a company’s support of social and ecological issues. Meanwhile, 61% of Americans say they are confused by the terms companies use to talk about efforts to solve the climate crisis. It’s not just consumers taking a magnifying glass to green claims. Companies are feeling pressure from investors, governmental regulators, and independent ranking and rating organizations to be greener.

Greenwashing relies heavily on companies trying to convince consumers that their products are sustainable. While market research consistently identifies Gen Z as caring the most about the planet of any generation, this generation of consumers is also most on guard for inconsistency in messaging. A 2021 survey by McKinsey found 88 percent of American Gen Z’ers do not trust brands’ environmental, social, and governance (ESG) claims.

It's not just consumers who feel confused; marketers and brands feel the same. Many brands are doing the right thing but are struggling to suitably showcase their efforts on the packaging. About 50% of marketers express concern about being accused of ‘greenwashing’ in their attempt to promote legitimate sustainability efforts. The Chartered Institute of Marketing has recently shed light on the dilemma confronting marketers aiming to showcase their sustainability efforts, citing 50% of surveyed marketing executives express concern about being accused of 'greenwashing.’

Perhaps a result of this dilemma, more brands are ‘green hushing’ or ‘green silencing’, which means they are scared to talk about their sustainability work for fear of being called out for greenwashing, and/or increased regulatory scrutiny. Sustainability consultant South Pole reports 67% of surveyed companies voluntarily stopped publicizing their ESG efforts. 

ESG Washing: Sorting the Colors

Businesses, large and small, are increasingly recognizing the growing requirements of Environmental, Social, and Governance (ESG) practices as sustainability becomes a business imperative - no more a flashy buzzword. Companies now prioritize ESG factors to enhance their reputation, attract employees as well as consumers, and also access investors. However, this need to show ESG credibility is also driving poor business practices amongst those in the blind pursuit for profit. These companies attempt to cover up their ESG deficiencies with various forms - colors – of corporate sustainability washing. 

 How many colors can you sort?

Greenwashing
Greenwashing is the deceptive practice of making exaggerated or false claims about a company's environmental friendliness or sustainability efforts. It misleads consumers about sustainability practices and creates a false image of responsibility.

Bluewashing
Bluewashing is when companies join the UN Global Compact to enhance their brand credibility without making significant efforts and initiatives to fulfill their social reporting obligations. The blue refers to the color of the UN flag. It is similar to greenwashing but focuses more on economic and community factors, typically linked with reference to the UN Sustainable Development Goals (SDG’s).  

Blackwashing
Blackwashing involves exploiting racial equality issues for marketing without genuine support. Companies use diversity initiatives, like ethnic minority issues, as a facade, potentially distracting from other business practices that may not align with proclaimed values.  

Purplewashing 
Purple-washing refers to deceptive marketing or co-opting strategies that use feminist themes or symbols to create a positive image for a company or organization while failing to genuinely and substantively address gender equality or support feminist causes.

Rainbow-washing
Rainbow-washing uses LGBTQ+ symbols and references for marketing without advocating for LGBTQ+ rights. Companies exploit Pride events with rainbow flags while neglecting real support or failing to address LGBTQ+ issues within their own organization. It trivializes the struggle for equality and inclusion.

Overloading the Wash

A recent evaluation of greenwashing in the European Union (EU) revealed that almost half of “green online claims” made by companies were found to be exaggerated, deceptive, or entirely false. Such alarming statistics have prompted legal actions in Europe and across the globe.

Furthermore, a new EU Directive is being considered, which may restrict environmental performance claims that lack substantial evidence.

In Australia the competition watchdog, Australian Competition and Consumer Commission (ACCC), has recently prioritized a crackdown on greenwashing practices.

In late 2022, the Australian Consumer Policy Research Centre investigated how much greenwashing was happening in Australia on any given day.  The result of their investigation wasn't great. Researchers identified the number of green claims an  average Australian sees in a day, through a combination of online, offline, at shops, or on public transport. They reported an average of 122 green claims across 17 sectors, but they also found that 69 percent of those claims lack supporting evidence or verification.   

A cosmetics brand launched a beauty product in a "paper bottle" as part of a broader brand initiative to reduce plastic packaging. In April 2021, a customer discovered that it was simply a plastic bottle wrapped in paper, prompting social media outrage and an apology from the brand.

Avoiding the Wash 

According to a retail sweep by the ACCC, the personal care sector has the highest percentage of concerning green claims.

Many of the sustainability claims made were classified as are very deceptive.

The research report by the Consumer Policy Research Center highlights some real time cases and common pitfalls when they swept the shops in Australia. Here are some standout examples: 

Absurd Claims

Claims lack of specific action or impact through the consumption of the product.

Contradictory

Claims on disposable products about low resource use and recyclability can be questionable with little to no evidence.

Oddly specific

Claims deemed to be too specific could be making a selective disclosure, shifting the focus of customers to only look at one aspect, and in the process, losing the overall environmental impact of the product.

Spot the Washing

Take our 7-question quiz and see how well you can spot the greenwashing. 

IN THE NEWS

Regulators Narrow the Green Gap  

The good news: regulatory pushback against greenwashing is improving. The onus should not be on consumers to verify claims or spend hours researching sustainability claims they encounter.

Although many countries now have legal frameworks for greenwashing, several countries have taken extra steps to regulate greenwashing practices and improve consumer law protections. An analysis by AMPLYFI illustrates that much of the world has regulations in place against greenwashing, with the US, EU, UK, and Australia leading the way.

Australia 
Australian Securities and Investments Commission (ASIC) has been closely scrutinizing sustainability and other ESG claims lately.

In February 2023, ASIC sued Mercer Superannuation in its first greenwashing prosecution. Mercer marketed one of its investment funds, Sustainable Plus Investment Options, as suitable for members who are “deeply committed to sustainability”, vowing to exclude investments in companies involved in alcohol, gambling, and carbon-intensive fossil fuels. However, ASIC discovered Mercer’s fund had holdings in nearly 50 companies that should have been excluded: 19 companies in gambling, including Aristocrat, Crown Resorts, and Tabcorp; 15 companies involved in fossil fuels, including AGL, BHP, Whitehaven Coal; and 15 involved in alcohol production, including Budweiser, Carlsberg, Heineken, and Treasury Wine Estates. 
Another federal regulatory body, Australian Competition and Consumer Commission (ACCC) has also been cracking down on greenwashing, publishing their draft guidance on 14 July 2023. The proposed penalty could be up to 30% of a corporation’s annual turnover. 

On 25 July 2023, ASIC took billion dollar investment fund Vanguard to court for the second time over greenwashing claims. We have yet to hear the outcome of this legal action.

United States

Similarly, the United States has seen increased attention to greenwashing. Several consumers class action lawsuits involve greenwashing statements.

Australian brand Bondi Sands was hit with a lawsuit in 2021 for falsely claiming its sunscreen was ‘reef friendly’ without adequate definition and no third-party certifications.

On the legislative enforcement side, the Federal Trade Commission (FTC) has been actively monitoring and taking action against companies making false or unsubstantiated environmental claims. The FTC recently updated its Green Guides, guidelines for companies on claims around ‘recyclable, degradable, and carbon offsets.’ In the news recently, FTC has taken Walmart and Kohl’s to court seeking the largest-ever civil penalty of $5.5 million over deceptive green claims ‘free of harmful chemicals, using clean nontoxic materials’. While in reality, the contentious products are purported to contain toxic chemicals and pollutants.

European Union 

In Europe, the European Union has introduced the Sustainable Finance Disclosure Regulation (SFDR), which requires financial market participants and advisors to disclose information regarding the environmental sustainability of their products. The SFDR aims to promote transparency and prevent misleading green claims.

United Kingdom

The British Advertising Standards Authority (ASA) slammed Persil, the market leading Unilever laundry detergent in August 2022 for misleading and unsubstantiated claims.