What It Is
Greenwashing is the act of misleading or making false claims to consumers concerning the environmental benefits of a product or the environmental actions and practices of a company.
Why It Matters
In a 2007 study of six big box stores by TerraChoice Environmental Marketing Inc., 1,018 consumer products were identified bearing 1,753 environmental claims. In all but one of these products, the environmental claims were demonstrably false or had the potential to mislead the anticipated audiences. 
These false or misleading environmental claims can have significant consequences including:
- Misleading well-intentioned consumers into buying products that do not actually have any environmental benefit.
- Stifling actual environmental innovation in the consumer marketplace, especially when products with illegitimate environmental claims take a larger market share.
- Feelings of cynicism and doubt by consumers towards all environmental claims. This would significantly reduce a market-based and financial incentive for environmental product innovation.
- Ruining a business’s credibility.
Business owners should be informed about the most common types of greenwashing so that they can avoid these practices in their own business. TerraChoice categorized the most common types of greenwashing into the “Six Sins of Greenwashing.” The six sins include:
- Sin of the Hidden Trade-off
- Sin of No Proof
- Sin of Vagueness
- Sin of Irrelevance
- Sin of Lesser of Two Evils
- Sin of Fibbing
1.) Sin of the Hidden Trade-Off – This offense occurred the most frequent, and is made when a product is labeled environmentally friendly based on a single environmental attribute (e.g.: percent recycled content) or on a very narrow set of characteristics (e.g.: percent recycled content and using soy ink). Little or no attention is given to other, maybe more important, environmental issues, like energy and water use, impacts of forestry practices, and paper/packaging manufacturing. While the environmental claims are usually true, they often fail to provide a complete environmental analysis of the product, making the product seem “greener” than it actually is.
An example includes office technology, like copiers, printers, scanners, and fax machines that promotes its energy efficiency but does not discuss hazardous material content, effect on indoor air quality, or ability to work recycled paper or remanufactured toner cartridges.
2.) Sin of No Proof – This occurs when there is no easily accessible proof regarding a stated environmental claim. This includes a lack of information provided at time of purchase or on the product website and a lack of a reputable third-party certification.
Examples include lamps and light bulbs that claim energy efficiency without offering any evidence or certifications supporting this claim.
3.) Sin of Vagueness – This happens when an environmental claim is very broad or poorly defined, making it difficult for the customer to understand the environmental claim’s true meaning. These vague claims include phrases like “All Natural” (substances like arsenic, uranium, mercury, and formaldehyde are natural, but also poisonous). Another vague claim is when a product states it contains “recycled content”, but does not specify what percentage is recycled content.
Product examples include “chemical free” garden insecticide and “100% natural” bathroom cleaners.
4). Sin of Irrelevance – This occurs when an environmental claim is made that may be truthful, but is unhelpful or not important when consumers are trying to find products with meaningful environmental benefits.
The most common example of this sin is when products claim they are chlorofluorocarbon (CFC) free. CFCs are a principal contributor to ozone depletion, and because of this, have been banned from use for over 30 years, meaning every product is CFC free. These claims of irrelevance prevent consumers from finding products that are truly a more environmentally friendly option.
5.) Sin of Lesser of Two Evils – This is when a true environmental claim is made on a product, but the claim distracts the consumer from the larger environmental impacts of the entire product category.
An example is “green” insecticides and herbicides. While it is true that consumers purchase products like this out of necessity, in this case, you should try to ensure you purchase the least environmentally harmful product available.
6.) Sin of Fibbing – The least commonly occurring offense, this happens when product certification by an independent authority is misused or misrepresented.
An example includes a product labeled “Energy Star” certified, but there is no verification of this claim on the Energy Star website. 
Not only is it important for business owners to understand what constitutes greenwashing for credibility purposes, but because the Federal Trade Commission (FTC) can bring legal action against businesses making allegedly false or unsubstantiated environmental claims. In order to help businesses and marketers avoid making these unsubstantiated environmental claims, the FTC has published the Guides for the Use of Environmental Marketing Claims, also known as the Green Guides. The 2010 revised Green Guides includes new information on use of product certifications and seals of approval, and for claims of renewable energy and materials use, and carbon offsets.  During the past 3 years, the FTC has brought seven enforcement actions against businesses for false environmental advertising. 
Four clothing companies were charged by the FTC in 2009 with deceptive labeling practices and false advertising for claiming their clothes were made of bamboo fiber, manufactured in an environmentally friendly process, maintain the natural antimicrobial properties of the bamboo, and are biodegradable. It was discovered that the clothing was actually made of rayon, “a man-made fiber created from the cellulose found in plants and trees and processed with a harsh chemical that releases hazardous air pollutants.”  In this instance, the label should read “rayon made from bamboo.” In addition, due to the nature of the manufacturing process, the antimicrobial properties of the bamboo plant would not have been retained in the clothing itself. Three of the companies have settled with the FTC and have stopped making the false claims, and will comply with the FTC’s Textile Fiber Products Identification Act (Textile Act) and Rules. 
Seventy-eight small and large companies selling or advertising textile products falsely labeled “bamboo” were also sent warning letters by the FTC. The letters explained that the companies may be breaking the law and that they should review the labeling and advertising of the questionable products, and correct or remove any misleading bamboo claims. 
- Greentailing and Other Revolutions in Retail: Hot Ideas that are Grabbing Customers’ Attention and Raising Profits by Neil Z. Stern and Willard N. Ander
- Smart Green: How to Implement Sustainable Business Practices in Any Industry – And Make Money by Jonathan M. Estes
- The Six Sins of Greenwashing, recorded at Sustain ’08: Plastics Business Summit. This video describes the six sins of greenwashing and provides examples of each.
- Revised FTC Green Guides. Extensive PDF document with the 2012 Green Guides, detailing how to responsibly market sustainability in a business.
- Greenwashing is Bad: Get to Know the FTC Green Guides by Lara Pearson. This report generally describes the Green Guides, and explains their review process and proposed revisions.
- The EnviroMedia Greenwashing Index. A website where you can post, view, and rate environmental ads. Also includes greenwashing-related articles and news stories.
As more and more consumers want to make environmentally friendly purchases, businesses are responding by implementing environmental standards. These environmental standards can help businesses compete in the market by increasing market share, price premiums, public goodwill, and visibility. But the environmental claims companies make must be truthful, honest, and transparent in order to keep the trust of consumers and comply with the policies of the Federal Trade Commission.
 Information retrieved from The “Six Sins of Greenwashing” A Study of Environmental Claims in North American Consumer Markets, http://www.terrachoice.com/files/6_sins.pdf
 Information retrieved from Reporter Resources: The FTC’s Green Guides, http://www.ftc.gov/opa/reporter/greengds.shtm
 Information retrieved from FTC Green Guides’ Proposed Revisions Unveiled, http://www.environmentalleader.com/2010/10/06/ftc-green-guides-proposed-revisions-unveiled/
 Information retrieved from FTC Charges Companies with ‘Bamboo-zling’ Consumers with False Product Claims, http://www.ftc.gov/opa/2009/08/bamboo.shtm
 Information retrieved from FTC Warns 78 Retailers…to Stop Labeling and Advertising Rayon Textile Products as “Bamboo”, http://www.ftc.gov/opa/2010/02/bamboo.shtm