2024’s International Crackdown on Greenwashing Marketing

A Closer Look at 2024’s International Crackdown on Greenwashing Marketing Tactics

By Jack Shaw, senior writer and editor at Modded

In an increasingly environmentally-conscious world, many businesses are seeking eco-friendly ways to provide reliable services and craft sustainable products. With more than 60% of consumers seeking sustainability from the places they shop, adopting greener initiatives is vital for growing and retaining target audiences.

Although many companies have found unique ways to advertise sustainable products and green missions, some businesses have taken a different path that leads buyers to believe they’re investing in products and services that are more sustainable than they really are. This deceptive practice of greenwashing makes it challenging for consumers to make educated choices.

New laws and regulations have emerged, discouraging this ploy. Now, businesses must navigate these regulatory compliances while meeting consumer demands. Failing to adapt to these changes can bring several adverse consequences for businesses. Here, you can learn more about the risks of greenwashing and the banned practices you should avoid to remain an industry leader or top competitor.

See Also: An In-Depth Look At Greenwashing… And Its Consequences

The Risks of Greenwashing

At the core of greenwashing is the aim to misrepresent a product or service through misleading environmental practices or credentials. Companies that engage in greenwashing face several risks, including:

• Reputational damage: Companies that engage in greenwashing often think the practice will help the business grow. While false marketing tactics could expand an audience initially, companies can face severe backlash when the truth surfaces. Buyers are quick to boycott dishonest companies, often spreading negative information on social media to tarnish a company’s reputation and sway other consumers to competitors.
• Litigation: Authorities are taking a proactive approach to monitor, assess and address a company’s regulatory violations. Legal authorities can impose penalties for businesses that engage in greenwashing.
• Fewer growth opportunities: Shareholders and investors are also watching for greenwashing practices. If a company utilizes this practice, shareholders could exercise their power to vote on specific resolutions to address the issue. Additionally, investors may turn to competitors if a company appears dishonest, diminishing financial opportunities and the possibility of becoming an industry leader.

Green Misleading Practices to Avoid

The Federal Trade Commission (FTC) created informative guides to help marketers ensure the truth and validity of their environmental claims or attributes. The FTC updates the “Green Guides” to account for emerging practices, with the most recent updates regarding the use of seals of approval and product certifications or energy sources or materials “carbon offset” or “renewable” claims. Practices your business should avoid include:

• Making vague or misleading claims: Half-truths or vague information that leave room for interpretation can be misleading. For example, simply claiming a product as environmentally friendly is vague, allowing people to make assumptions about a company’s product or processes. Businesses should specify what claims refer to and verify claims with valid certifications and accreditations.
• Using unverified data: When seeking accreditation or certification, businesses should rely on trustworthy auditors and resources. Relying on unverified third parties can result in inaccurate certifications or accreditations that lead to greenwashing claims.
• Advertising false timespans: Many companies have shared goals to become carbon-neutral, implement new practices, or reduce specific material usage within several years. However, making claims about the future when you cannot ensure the sustainable performance by your proposed timeline is greenwashing.

Businesses across industries must discover new ways to be sustainable. Take the automaking industry — automakers like Tesla, General Motors and Ford have adopted greener automotive practices like using renewable energy in facilities, reducing emissions and seeking carbon neutrality in the upcoming years.

New Laws and Regulations to Note

Environmental efforts are a global concern, and as such, governments from around the world are implementing new laws and regulations surrounding greenwashing. Here’s what you should know about some of the most recent changes:

• The European Parliament: As of February 2024, a new directive amended the Consumer Rights Directive and Unfair Commercial Practices Directive. This directive ensures consumers have the right to know which products are reparable and durable. It also ensures that traders comparing product sustainability must disclose information about the comparison method, product suppliers and products.
• FTC: The most recent FTC change involves amendments to the Energy Labeling Rule. The change could require new energy labels for consumer product categories like air cleaners. Another notable change occurred in 2023 when the FTC evaluated “recyclable” claims to help marketers avoid greenwashing.
• Financial Conduct Authority: In May of 2024 a new rule came about to protect consumers from false product descriptions. The Financial Conduct Authority requires all authorized firms to meet this rule to ensure consumers can make informed decisions.
• California: Some states are taking anti-greenwashing into their own hands. California recently signed the Voluntary Carbon Market Disclosures Act. This act aims to address and prevent greenwashing by requiring California entities to disclose the tracking and verifying of claims regarding carbon neutrality, net zero or emissions reductions.

Businesses That Have Faced Repercussions

Several businesses, small and large, have faced repercussions from dishonest sustainability claims. Businesses have been using greenwashing tactics for years, causing new regulations to arise.

For example, in 2009, Kmart, Tender and Dyna-E faced administrative complaints for misusing “biodegradable” claims. The “Green Guides” now state that companies can only refer to a product as biodegradable if there is evidence that the product will decompose within a reasonable period under customary disposal methods.

Over the last several years, several other changes made their way into the “Green Guides” to help marketers understand terms like “carbon neutral” and “sustainable to ensure businesses advertise products, services, and missions accurately. Other cases of greenwashing include:

• Kohl’s Inc. and Walmart: In 2022, Kohl’s Inc. faces an FTC lawsuit regarding textile products. Kohl’s Inc. and Walmart were marketing rayon textile products as bamboo. Along with advertising products with the wrong material, these companies also claimed making the textiles involved an eco-friendly process. In reality, the converting process involved using toxic chemicals, resulting in hazardous pollutants. The result of the lawsuit forced the companies to pay between $2.5 and $3 million each and stop using misleading advertising.
• Volkswagen Group of America, Inc.: Volkswagen was engaged in a lawsuit with the FTC from 2016 to 2020. The case formed around the company’s use of “clean diesel” marketing. Volkswagen had marketed over 550,000 vehicles as environmentally friendly. The company ended up repaying customers over $9.5 billion as a result of the case, with consumers having the choice to sell their vehicles back to Volkswagen, terminate their leases or receive compensation and modifications to their vehicles.
• Truly Organic Inc.: This company faced FTC allegations regarding their bath and beauty products. Although the company has advertised products as “certified organic” and “100% organic,” the products do not meet the necessary criteria from the United States Department of Agriculture. Truly Organic will pay a settlement of $1.76 million as a result.
• Nordstrom, Inc.: The 2015 case against Nordstrom also involved false advertising of textile products. The case notes that Nordstrom failed to use the generic and well-known name for manufactured fiber in information in any advertising, invoices, or labels regarding their textile product. Nordsrorm ultimately paid $360,000 without having the ability to demand fund returns.

Best Practices for Adhering to Regulatory Changes

Businesses can adopt several strategies to manage greenwashing risks. Check out these best practices:

• Understand your risks: Each organization can face unique greenwashing risks, with some industries having more stringent requirements than others. You should be aware of your industry’s risks and any specific risks your business may face. Defining terms and accessing reliable data can help you determine your risks and how to avoid them.
• Educate your team: With constant regulation changes, a lack of precise definitions and growing consumer demand, it can be challenging to fully grasp proper environmental marketing tactics. Educating your team on the information relevant to your industry and business can reduce greenwashing risks and align your team with the appropriate regulations.
• Leverage powerful technologies: Machine learning and predictive analytics can empower businesses to identify and prevent greenwashing. These technologies can aid in risk mitigation and help you make more informed decisions.
• Prepare for incidents: Despite your best efforts, it’s impossible to account for every possible outcome. Regardless of your actions and disclosures, consumers can criticize or accuse your businesses of greenwashing. You must have a management plan to address potential incidents to minimize adverse outcomes.

Support Sustainability Honestly and Accurately

Sustainability is an ever-growing concern and topic. Modern businesses must meet consumer demands honestly and accurately. Engaging in greenwashing practices can harm businesses in several ways and diminish consumer relationships. As our world continues to seek greener alternatives, it’s imperative to meet the new laws and regulations to help consumers make informed decisions. Marketers in every industry must remain up to date on trends, changes and industry expectations to aid in business growth and position their company as an industry leader.

Author Bio

Jack Shaw, the senior writer and editor at Modded, specializes in weaving together the threads of health and wellness with greater concerns about sustainability best practices and industry developments. With a commitment to providing actionable insights and empowering readers, Through his writing, Jack seeks to educate and inspire individuals on their journey toward more eco-friendly decisions. Feel free to connect with him via LinkedIn.