“Climate-friendly”. “Energy-efficient”. “Biodegradable”. Claims like these are all over advertising, social media and packaging, making a big deal of the “green” features and benefits of the products or services they’re trying to sell.
It’s important information that consumers want to know, so they can make sustainable purchasing choices. But how can they tell if a claim is telling the truth, the whole truth, and nothing but the truth?
This article will help your business avoid the pitfalls of greenwashing by making verifiable, evidence-based claims that respect regulations, avoid fines, and gain consumer trust.
The role of misleading labels in greenwashing
Let’s start with a quick definition of greenwashing: businesses using misleading claims and marketing tricks in order to persuade consumers that their products seem better for the planet than they really are.
One widespread method of greenwashing is the use of labels, for example “climate-neutral”, which you can find on everything from coffee to sneakers. So far so good, but did you know that there are over 80 ways of measuring and reporting carbon emissions?
Then there are the other eco-labels, like “organic”, “responsible”, and “upcycled”. Over 450 are in use worldwide at the time of writing, making for a huge range of environmental promises and claims. How can a consumer know which ones to trust? For that matter, how can a business be sure that it has chosen a reputable organisation to certify its products?
It doesn’t take much to turn a well-meaning claim into a misleading label: a lack of transparency about your measurement methodology; few credible partners in your supply chain to back up your story; no information on your company website to show that your corporate mission is aligned with what you say about your products.
In other words the label is just the starting point. You must also show that your business is walking the walk, as well as talking the talk. Only using labels without also disclosing the full story is vague or downright dishonest — and that’s greenwashing.
The impact of greenwashing on consumer trust
People want to shop more sustainably. A March 2024 report by PWC found that “products featuring sustainability attributes can achieve a revenue increase of 6% to 25%+ over products without such emphasis”.
But with so many products using similar claims, consumers have to do a lot of work to verify whether the truth behind the claims aligns with their personal sustainability values.
It’s no wonder that people are skeptical and hesitant to make decisions. Even worse, the effort it takes to identify a genuine sustainability claim might lead people to give up on trying to make sustainable choices at all.
Greenwashing undermines consumers’ trust, making them less likely to buy and use not just the product in question, but any product labelled as environmentally friendly, whether those claims are genuine or not.
That’s why governments are constantly improving regulations, to make sure the ESG claims businesses make are verifiable and evidence-based.
The importance of verifiable and evidence-based claims
When it comes to making claims about your products’ sustainability credentials, people need to know if what you’re saying is accurate and transparent.
For example, it’s no good saying “we’ve lowered CO2 emissions by 35%” without also specifying what you’re comparing these emissions to, and how you have arrived at your figure.
And as for the “climate-neutral” label mentioned above, the EU is now working on making companies unable to claim that a product has a neutral, reduced or positive impact on the environment if the claim is based on carbon offsets.
Which brings us to regulations. Making verifiable and evidence-based claims isn’t just right for consumers, it’s the law. The US, UK, and Netherlands all have different rules for making sustainability claims while avoiding greenwashing, and they’re constantly evolving.
They all agree on this though: any claims you make must be honest, clear and specific. They must also be backed up by solid evidence, for example a life cycle assessment that measures the carbon emissions of a product from material extraction through manufacturing and use to its eventual disposal.
If your company isn’t able to substantiate its ESG claims in this way, it’s important to not make those claims. If you do, you must be prepared to suffer the consequences.
The business consequences of greenwashing
If your company is suspected of greenwashing, the consequences can be expensive, both financially and in terms of damage to your brand and reputation.
In the UK for example, ASOS, Boohoo and Asda all had to sign formal agreements to use accurate and clear green fashion claims, following investigations by the Competition and Markets Authority (CMA). The CMA then issued a compliance guide for fashion brands, and advised 17 high-profile brands to review their green claims.
Under the Digital Markets, Competition and Consumers Act 2024, the CMA gained new powers to fine businesses up to 10% of their worldwide turnover if they make inaccurate claims that mislead shoppers.
In the US, consumers joined forces in 2023 to launch a class action lawsuit against Delta Airlines following its claim to be “the world’s first carbon-neutral airline”. The basis of the lawsuit is that Delta’s claim relies on carbon offsets, which actually do little to mitigate global heating — exactly the practice the EU is about to ban (see above).
As for brand reputation, studies have shown that consumers prefer to buy from trusted brands. This McKinsey and NielsenIQ analysis shows a clear link between consumer purchasing behaviour and ESG claims.
If your company can make verifiable and evidence-based ESG claims, it’s perfectly positioned to capitalise on this situation by gaining and maintaining consumer trust, while avoiding legal and financial penalties.
How Dayrize can help you make evidence-based claims
At Dayrize, we’ve always been committed to providing our customers with detailed insights into the environmental and social impact of their products. Our AI-powered SAAS platform lets you independently verify the sustainability of your products to your customers.
“In the greenwashing landscape, genuine sustainability claims must stand out through transparency and measurable impact, cutting through the noise of superficial promises. Evidence-based sustainability claims are the ultimate force in driving consumer trust.”
Bart Nollen
Co-Founder
Dayrize
By providing clear and truthful information, avoiding deceptive practices, and being upfront about any limitations or risks associated with your products, you can build trust and confidence with your customers.
Our platform will guide you to take the most effective actions to reduce your impact, and reach your sustainability targets faster.
Ready to start your sustainability journey? Sign up for a free demo today.
