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Greenwashing:
Eight principles to wash it out
What kind of green claims do you look for when purchasing dishwashing liquid? Recyclable bottle? Cruelty free? Made with 100% renewable electricity? And how do you know whether these claims are meaningful or true? In an era where people are beginning to be more environmentally conscious, consumers are increasingly scrutinizing the sustainability claims of businesses and products.
What's the issue with greenwashing?
Greenwashing erodes consumer trust and misleads buying decisions. By giving a false impression of eco-friendliness, companies that engage in greenwashing can harm the environment, as well as impede any organisations making genuine effort to address environmental issues. As consumers become more eco-conscious, they demand transparency, honesty, and authentic sustainability efforts from businesses.
Greenwashing is often unintentional and lies in the eye of the beholder. A claim such as “kinder to the planet” may be judged differently by individuals. However, we expand on some basic rules to avoid claim that may be perceived as greenwashing. Arguably there are two courts that may judge.
The court of law
In Aotearoa New Zealand, the Fair Trading Act provides the legal base with regards to deceptive marketing practices and competitive behaviours, including greenwashing. The Commerce Commission as the government agency is then tasked with enforcing the legislation. To support businesses, they published handy Environmental Claims Guidelines which outline general principles and include examples of cases examined by the Commission in the past. The other relevant body is the Advertising Standards Authority, a self-regulatory group by the industry. Their Advertising Standards Code stipulates that “environmental claims must be accurate and able to be substantiated by evidence that reflects scientific and technological developments.”
The Fair Trading Act and the Advertising Standards Code are not very specific or strict for sustainability claims. On that front the EU is a space to watch. In March 2023, the European Commission adopted a proposal for a Directive on Green Claims. It aims at providing clear criteria for environmental claims and labels..
The court of public opinion
While a claim may be legal, consumer perception is of equal importance. Consumers can be misled by half-baked or incomplete information, especially when they lack the technical knowledge to decipher environmental claims. Which is why we can see an increasing number of critical lenses being applied to green claims made by a company. ConsumerNZ has been sharing campaigns and requests to report potential cases of greenwashing. Consumer NZ called out organisations like Proper crisps for their claim around their bags being compostable, Dilmah for their biodegradable tea bags, Countdown’s grass-fed butter and beef and many others.
On the surface, the claims made by these brands may seem legit, however when put under the microscope, Proper crisps’ bags do not meet the best practice guidelines for composting set out by WasteMINZ and PlasticsNZ. Dilmah’s biodegradable claims are not supported in New Zealand due to the shortage of composting facilities. And the grass-fed butter and beef simply don’t have much meaning as 98% of New Zealand beef and lamb is grass-fed which may question what is so special about Countdown’s beef and butter? Such critical reviews certainly empower consumers, but also put additional pressure on companies to get it right. Critical claims like these drive organisations to withdraw products that may be misleading. For example, as part of its recent campaign, ConsumerNZ accused AirNZ of greenwashing over compostable cups. Soon after AirNZ started phasing out single-use cups from its lounges.
Better to make no green claims at all?
Heck no! It's just a question of getting it right.
Authenticity and transparency are essential and businesses should continue working to reduce negative impacts of products on the planet. Businesses should prioritise sustainable practices and communicate them responsibly to build trust and contribute to a more environmentally conscious world.
An example is The Warehouse vs. Kmart. Warehouse’s green claims have been critically reviewed over the years, for example, Warehouse saying that their products have at least one sustainable feature (very specific!). At the same time, Kmart does not make any green claims, which is why it isn’t under scrutiny for greenwashing. How does this affect where will you choose to shop?
Eight principles to avoid greenwashing
To ensure your organisation avoids greenwashing and builds trust with consumers, we suggest 8 principles to assess how greenwashy a claim is. These filters can help organisations be mindful of the claims they make.
Clear and unambiguous: Ensure that sustainability claims are crystal clear and leave no room for misinterpretation.
The terms used in a claim, and the meaning they convey to consumers, should be clear. General claims are more likely to be unclear and misleading. E.g., Product claims such as “green”, “sustainable”, “eco-friendly”, “environmentally friendly”, “eco”, “earth friendly”, “carbon neutral”, “climate neutral”, “conscious”, “non-polluting”, “biodegradable”, “nature’s friend” and “ozone friendly” can be understood as if a product has a positive environmental impact or at least no adverse impact. Such claims are also almost impossible to substantiate.
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Truthful and accurate: Provide accurate information regarding the environmental benefits of a product or service
Consumers should be provided with accurate information, along with sufficient data to verify whether the information provided is true. Claims must not suggest that products provide environmental benefits which are actually standard features (e.g., claims based on the absence of ingredients which have never been associated with the product category); or legal requirements (e.g., ingredients prohibited by law).
Material and significant: consider the most environmentally significant aspects of the product
Avoid making statements of progress (for example, a 5% reduction in plastic packaging) when this improvement relates only to a minor aspect of the overall environmental impact of the product.
Complete information: disclose all relevant information, even if it doesn't paint the product in the best light
Claims must not omit or hide information that consumers would normally take into consideration before purchasing the product. For example, a product may contain a claim about a “reduced transport carbon footprint by 50%". If the carbon reduction has been achieved through carbon offsetting rather than actual reduction, this needs to be disclosed.
An example of incomplete information is the legal action taken against Farmland Foods for misleading its consumers about the place of origin of some of its ham products. While the claims Farmland Foods made were relevant for most of their products, certain ham products did not qualify. Full story here.
Fair comparison: Apples with apples - comparative claims need to be fairly made
Comparisons need to be made in a way that compares like-with-like in the eyes of consumers and be based on reasonable evidence. So, if an organisation claims that it's products create less waste compared to conventional alternatives, the claim needs to be supported with enough information for consumers to fairly evaluate that comparison.
Evidence-based: to be truthful and accurate, support claims with robust, credible and up to date evidence that supports them
Back sustainability claims with verifiable evidence, such as certifications, test results, or third-party audits. Avoid self-declared claims, specifically if they are not based on an externally recognised methodology, e.g., labelling a product as "100% eco-friendly" without substantiating this claim through a reputable environmental certification.
For example, Fujitsu NZ was fined by the Commerce Commission for making unsubstantiated claims about the energy efficiency and performance of their heat pumps. Read the full story here.
Review claims regularly
Claims need to be reassessed and updated to reflect changes in technology, legislation, scientific evidence standards, consumer awareness and expectations or other circumstances to ensure that the claim remains relevant and accurate.
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Symbols and imagery: when using eco-labels or symbols, ensure they accurately represent the product's environmental performance
Self-declaring symbols are more likely to be considered misleading, especially if one symbol is used for more than one claim. An example is the commonly used plastic resin identification codes. Their purpose is to declare the type of material. However, they don't necessarily mean that the product can or will be recycled in NZ and shouldn't, without further enquiry, be the basis for a claim that the product is recyclable.
In another example, Consumer NZ took issues with the use of a