When American environmentalist Jay Westerveld coined the term ‘greenwash’ in the 1980s, he had in mind how guests at a hotel in Fiji were requested to reuse their towels to ‘help the environment’ – as the resort’s rapid expansion continued apace with little consideration for environmental impact. Whitewashing and laundry danced around in Westerveld’s head, and he came up with greenwash as a label for disguising self-interested business initiatives (in this case, lower laundry costs) as measures to protect the environment.
The word has entered popular use and is now in the dictionaries. But greenwashing has had different meanings for different people at different times.
If greenwashers are left unchecked, they will shatter any hope of a sustainable future
Brand burnish
In its early days, greenwashing was largely a corporate response to the environmental movement’s focus on pollution. Industrial players tried to varnish their image by promoting themselves as eco-friendly although their operations and policies often gave lie to such claims.
Back then, nobody was talking about an existential threat, and it was easier to dismiss greenwashing as cynical or overenthusiastic marketing and public relations.
This is not true any more. Climate change, ESG (environmental, social and governance) issues, and the sustainable development agenda are now in the forefront of public consciousness. Massaging the brand is still a major underlying motivation for greenwashing, but market demand, regulatory requirements and looming deadlines are also driving the practice today.
From pest to peril
With so much at stake, the greenwashers do not just stretch and bend the truth. If they are left unchecked, they will shatter any hope of a sustainable future. Greenwashing creates distrust and inertia, which seriously undermine the fight against climate change. It also distorts markets and hinders the allocation of resources for climate action.
In April last year, when speaking about the targets of cutting greenhouse gas emissions by 45% by 2030 and reaching net zero by 2050, the United Nations secretary-general António Guterres warned: ‘The world is in a race against time. We cannot afford slow movers, fake movers or any form of greenwashing.’
Recent developments show that regulators and international organisations are increasingly resolute and clear-minded in dealing with greenwashing. They are issuing standards and guidelines to help identify and prevent it, and are more willing to take enforcement actions against its various manifestations.
Broader definition
Progress on this front will surely speed up once there is broad agreement on the definition of greenwashing. The term was originally used in the context of the environment, but it should be expanded to cover social issues as well. Given the global importance of the UN’s 2030 Agenda for Sustainable Development, it is relevant and timely to look at greenwashing from a sustainability perspective.
There are distinct takes on the extent of falsehood that constitutes greenwashing. For some, greenwashing is false advertising and misleading claims. Others define it as claims that are not substantiated by credible third-party certification or evidence. Another view is that greenwashing involves claims that are not typically false in themselves but are selective disclosures of positive information and the obscuring of negative information.
An organisation may be greenwashing even if it is not consciously aiming to do so
It is wrong, though, to think that greenwashing is exclusively the work of those out to deceive. In a guide to how to avoid greenwashing, co-published in April 2023, non-profit organisation ClientEarth and the Asia Investor Group on Climate Change point out that there is widening acceptance of the idea that greenwashing does not have to be deliberate. In other words, an organisation may be greenwashing even if it is not consciously aiming to do so.
Antitoxic
This is where accountants and auditors have a key role. With the increasing emphasis on sustainable reporting, the lack of understanding, thoroughness and resources can cause unintentional greenwashing via reports that contain significantly inadequate or inaccurate information.
Businesses risk running into serious trouble if they pay lip service only to addressing their environmental and social impact. It is time to recognise that accountants and auditors must be part of the anti-greenwashing campaign, because they are professionally obliged and equipped to help these businesses walk the talk.
