Decarbonization Demystified – The Dangers of Greenwashing

Greenwashing can be dangerous for both the climate and your business—learn not only how to spot, but also avoid it on your journey to becoming net-zero.

Achieving net-zero is a crucial step towards tackling climate change. An economy with net-zero greenhouse gas (GHG) emissions is one of the European Union’s (EU) goals, ensuring that countries across the block are climate-neutral by 2050.

And while that goal is essential for the future of our planet, the term is still new and refers to balancing the amount of GHG produced (e.g., lowering emissions) and removed (e.g., carbon capture, planting trees) from the atmosphere. However, the how of net-zero can be vague, leaving room for the dangers of greenwashing.

What is greenwashing?

As the pressure to achieve net-zero rises, so does the attention companies and the general public give to environmental issues. Stakeholders, investors, and consumers have pushed a greener agenda. And although communication about environmental performance is positive, the actual performance can be negative – an effect called greenwashing.

Activist Jay Westerveld was the first to use the term in 1986. Then, it related to hotels asking guests to reuse towels as part of a water conservation strategy when, in fact, that action didn't have a significant environmental impact.

Greenwashing happens when eco-friendly claims are empty, vague, or not true at all. Although there's not a rigid definition for the term, it can be divided into two categories:

  • Selective disclosure–when a company misleads consumers with positive communication about green performance or promotes disinformation about their environmental practices to sell products or services
  • Decoupling–symbolic green discourse to meet stakeholders' requirements or relieve public pressures without any concrete action

This type of discourse not only generates mistrust amongst consumers and stakeholders, but it's also damaging to the climate.

How is it dangerous for the climate?

At first, it might seem like these empty green claims are relatively harmless. But they're not: they are dangerous for the climate, as they give a false impression of action being taken and thus slow down any chances of actually meeting the EU's net-zero goals. 

If greenwashing claims are used to sell products and services, consumers might not be making the environmentally friendly decisions they think they are. And if companies and business leaders are not transparent and honest in their sustainability journeys, it's clear that they won't reduce their GHG emissions.

If our planet’s average temperature rises above 1.5C above preindustrial levels, we will likely see more extreme weather and sea-level rise, generating food and water shortages, climate-related mass migration, and conflicts. It’s important to underline that misinformation generates confusion and skepticism. And while political, societal, and economic pressures (such as the carbon border tax) are necessary, it’s only through genuine decarbonization efforts that a net-zero future will be achieved – benefitting our planet, and businesses too.

How does greenwashing harm businesses?

Greenwashing feeds on what most CEOs are best at: confidence and inspiring followership. But using these skills in a non-transparent way is damaging in the long term. When companies greenwash, they risk their reputation, both with stakeholders and consumers, threatening future investments and market share. 

On the other hand, companies who implement efficient – and legitimate – decarbonization and sustainability strategies will benefit from more innovation and greener corporate values.

Sustainability is a basic requirement for businesses to succeed, and a crucial step in any companies' strategy. But how do we spot if their claims are legitimate and their net-zero efforts valid?

How to spot greenwashing

It can be tricky to recognize greenwashing when so many businesses constantly announce green measures – at first glance, it all looks like great news. But if you want to spot greenwashing, here are a few topics you should keep an eye on: 

Look for credible plans

Words in green marketing campaigns are pretty but look for the actual plans (for example, plans to cut fossil fuel use). Target setting must be specific and focused in the short term (e.g., 1–2 years max) and long term (e.g., ”by 2050"). 

Check if they are being transparent

Greenwashing is only allowed to thrive when businesses are not transparent. Check out companies' publicly available reports to see if they are compliant and taking action toward their goals.

Without data, it's impossible to develop 100% trust.

Remember that CO2 is not the only GHG

Yes, it's essential to reduce carbon emissions. But that's not the only culprit driving climate change. 

Methane, for example, is a byproduct of natural gas production and coal mining that has a climate impact up to 84 times greater than CO2 in a 20-year timeframe. Nitrous oxide and ozone are also GHGs that need emission controlling to reach net-zero goals.

Investigate quantifiable impacts

Transparency is good, but data comparison is even better. When companies disclose and quantify their impacts, they show a clear commitment towards sustainability – and stakeholders and consumers can see the measurement of net-zero efforts against what would have happened without them. 

Here, one of the rules of story-telling applies just as equally to sustainability and greenwashing prevention: show, don't tell.

Tech-assisted decarbonization efforts

Emphasis on impact quantification is a crucial first step in actually taking action to reduce corporate carbon footprint. Once businesses fully understand the scope of the challenge – without overlooking scope 3 emissions – they can make impactful reductions.

Climate tech solutions like carbmee can help enterprises to manage their environmental impacts from end to end with ease. Book a demo to learn how to take your business from theoretical goals to realized reductions. 


Further reading:

Environmental Sciences Europe, Concepts and forms of greenwashing: a systematic review

World Economic Forum, How to spot greenwashing – and how to stop it

Forbes, The Increasing Dangers Of Corporate Greenwashing In The Era Of Sustainability

Bloomberg, Greenwash or lifeline? Tough rules needed for credible net-zero plans

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