The Sins of ESG which is can cause you heavy fortune.

1. Exaggerated environmental claims

If a product's claims sound too good to be true, they might be. Unrealistic promises of dramatic environmental benefits without credible explanations are often a sign of greenwashing.

These claims prey on consumers' hopes for quick and effortless solutions to complex environmental challenges. Whether it's a cleaning product claiming to completely eliminate all pollutants with a single use or a device promising miraculous energy savings without any change in behaviour, such extravagant assertions should raise suspicions.

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2. Comparative Greenwashing

When a company compares its product to a more environmentally damaging alternative rather than addressing its own shortcomings, it might be attempting to distract from its own practices.

This form of greenwashing, often termed "comparative greenwashing," involves highlighting a product's relative benefits in comparison to a worse option rather than addressing the product's own environmental impact.

For instance, an automobile manufacturer might boast about its electric vehicle's lower emissions compared to a gas-guzzling SUV while conveniently overlooking other aspects, such as resource-intensive battery production or limited recycling options.

3. Unsubstantiated claims

Claims like "100% eco-friendly" or "zero impact" are rarely accurate. True sustainability involves a balance between social, economic, and environmental factors.

4. Lack of evidence or certifications

Legitimate eco-friendly products often have certifications from recognized organizations, such as USDA Organic, Climate Neutral, Energy Star, Certified B Corp or Fair Trade. If a product makes sustainability claims without any verifiable evidence, it might be a red flag.

Seven notable greenwashing examples

From IKEA to Keurig, there have been several notable examples of greenwashing that highlight the prevalence of this deceptive practice across various industries. These instances shed light on the lengths to which companies may go in order to appear environmentally conscious while sidestepping genuine sustainability efforts.

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IKEA

Widely regarded as the world’s largest single consumer of wood, IKEA came under the spotlight for greenwashing in 2020. The Swedish company uses 1% of the world's wood every year. Earthsight dug into the affairs of IKEA in an 18-month investigation and found out that IKEA sells beech chairs made from wood illegally felled in the forests of the Ukrainian Carpathians, home to endangered lynx and bears.

As amazing as this sounds, it gets even worse as the wood used to make these chairs were certified by the Forest Stewardship Council (FSC). The FSC certification is the leading green certification for timber. But somehow, the council certified the wood. This puts a dent on the credibility of FSC as a global leader in timber certification.

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Oatly

The United Kingdom Advertising Standards Authority came down hard on Oatly for making unsubstantiated claims in its adverts. The ads compared the carbon footprint of Oatly's milk with dairy milk. Following a series of complaints, the firm couldn’t provide enough evidence to back up many of its claims. This is a classic case of greenwashing where companies can’t walk the talk.

The on-screen text stated that "Oatly generates 73% less CO2e vs. milk, calculated from grower to grocer". However, ASA said the advert was misleading because Oatly based this claim on comparing only one of its products, the Oatly Barista Edition, with full cream milk. The ASA said viewers would understand the claim to include every single one of Oatly's products. Responding to the ban, Oatly’s spokesperson said they could have been more specific in the way they described some of the scientific data.

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Keurig

In yet another astounding illustration of greenwashing, a majority of Canadian consumers were led to believe that Keurig's K-Cup pods were fully recyclable. However, the reality is far from straightforward, as while the pods themselves may indeed possess recyclable properties, they faced rejection across most Canadian provinces, except for Quebec and British Columbia.

Presenting a product as recyclable operates under a blanket system that doesn't inherently account for regional variations in recycling infrastructure and regulations. This disconnection between the claim and the practicality of recycling underscores a broader issue within greenwashing, where simplified environmental claims often fail to encompass the complexities of sustainable practices and their real-world implementation. Ultimately, a $3 million fine was imposed on Keurig by the Competition Bureau.

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Innocent Drinks

Innocent Drinks was accused of greenwashing for pushing adverts that claim that buying their smoothies can help save the environment. Innocent Drinks is a subsidiary of Coca-Cola, and the beverage company is widely regarded as one of the worst plastic polluters globally.

In the advert entitled Little Drinks, Big Dreams, animated characters sang the lyrics: “We're messing up the planet. We're messing up real good”, against a backdrop of vehicles expelling pollutants, litter and dirty rivers. They subsequently sang: “Let’s get fixing up the planet. Fix it up real good…” with images of people recycling and squeezing fruit from a tree into Innocent smoothies.

An advocacy group known as Plastics Rebellion led a campaign against the advert, noting that the advertisement implies that buying single-use plastics is good for the environment. The United Kingdom’s Advertising Standards Authority (ASA) eventually banned the advert as it was deemed misleading. ASA acknowledged that while Innocent was working towards reducing the environmental impact of its products, it doesn’t necessarily mean their products have a net positive environmental impact over their full lifecycles.

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HSBC

Next on the list is HSBC. Two of HSBC’s adverts were banned on the grounds of misleading advertising and unsubstantiated environmental claims. In the lead-up to the COP26 held in Glasgow in 2021, HSBC put up posters in bus stops that stated the company’s commitment to a sustainable future. One such poster reads, “HSBC is aiming to provide up to $1 trillion in financing and investment globally to help our clients transition to net zero.” Another one reads, “We’re helping to plant 2 million trees which will lock in 1.25 million tonnes of carbon over their lifetime.” Both of these posters were designed with green-leaning backdrops.

However, the Advertising Standards Authority ruled that readers would understand the ads to mean that HSBC was making a positive overall environmental contribution as a company, which is untrue. HSBC conveniently overlooked its continued financing of natural gas and oil production, which contribute to greenhouse gas emissions.

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Windex

In 2019, Windex was called out for making misleading claims about its plastic packaging. They claimed that their bottles were made from 100% recycled ocean plastic, but in reality, the plastic came from recycled plastic that was never in the ocean. This is an example of greenwashing, which is when a company makes environmental claims that are not supported by evidence.

Windex's misleading claims about its plastic packaging were met with criticism from environmental groups and consumers. The company has since changed the content of its marketing campaigns to clarify that its bottles are made from ocean-bound plastic waste, which is plastic that is collected from landfills and other waste streams before it can reach the ocean. However, some environmental groups argue that even ocean-bound plastic is not a sustainable solution, as it still contributes to plastic pollution.

Volkswagen

Another famous example of greenwashing is the case of Volkswagen's "Clean Diesel" campaign. In the mid-2000s, Volkswagen marketed its diesel vehicles as environmentally friendly, claiming they had lower carbon dioxide emissions and better fuel efficiency. However, in 2015, it was revealed that Volkswagen had installed software in their vehicles that manipulated emissions tests, allowing the cars to pass regulatory standards while emitting much higher levels of pollutants in real-world driving conditions.

This scandal exposed the stark contrast between Volkswagen's green image and its actual environmental impact. The case highlighted the deceptive nature of some green marketing campaigns and the importance of independent verification and transparency in assessing a company's environmental claims.

Emmanuel Agyapong, CHRBP, ESG Pro

[email protected]