Regulate greenwashing behavior
sustainable selling. Consumers are attracted to products that claim to have a lower environmental impact. Ads are sometimes misleading; the term for deceptive ambient advertising is “greenwashing.” Perhaps the classic case of greenwashing is Volkswagen, which at one point advertised its diesel cars as “green” while setting up an elaborate software trick to fool environmental testing equipment.as Clifford Attier reported on car and driver Magazines for 2019:
“Volkswagen has installed emissions software on more than 500,000 diesel vehicles in the U.S. and approximately 10.5 million worldwide, allowing them to sense the unique parameters of the emissions-driven cycle set by the Environmental Protection Agency. According to the EPA and California According to the Air Resources Board, Researchers revealed in 2014 that, these so-called “failure devices” detect steering, throttle and other inputs used in the tests to switch between two different modes of operation. In test mode, the car fully complies with all federal emissions standards.But during normal driving, the computer switches to split mode-Significant changes to fuel pressure, injection timing, exhaust gas recirculation… While this mode may offer higher mileage and power, it also allows for heavier nitrogen oxide emissions (NOx) – a disease linked to lung cancer Smoke-forming pollutants—up to 40 times higher than the federal limit. “
Most examples of greenwashing are less sophisticated and less blatantly illegal. The greenwashing scandal has cost the public more than $20 billion in economic losses. The figure does not include reputation damage and loss of stock market value due to fraud. This led to a huge change in VW’s management that nearly destroyed the company. Most examples of greenwashing are relatively prosaic. They may include claims that a sweater is made from recycled material when in fact it is not, or the material may be recycled but its reused material has been dyed and cannot be recycled anymore, or its remanufacturing releases toxins to the sweater environment.
One problem with fighting greenwashing is that the definition of environmental impact is not always very precise. While the FTC has long issued green guidelines advising companies on good green advertising practices, it is now developing regulations to create mandatory rules for environmental marketing.according to Wall Street Journal’Second Dieter Holger:
“officers public comment Until Feb. 21, non-binding guidelines on how companies can make environmental marketing claims without violating federal laws prohibiting deceptive advertising. The FTC is asking whether it should consider codifying some of the guidelines into binding rules that would make it easier for officials to seek money in court… The FTC is also giving an opinion on whether the agency should address the 19 green clauses Comments were sought, including “sustainable,” “carbon neutral,” “low carbon,” “carbon negative,” and “net zero.”
Green marketing will be difficult to police because information about production processes and supply chains is far from transparent, and some false claims stem more from scientific uncertainty or illiteracy than from deceit. It is also the case that all production involves environmental trade-offs, and the fairly new academic field of life cycle analysis studies the full impact of the production process from cradle to grave. When conducting life cycle analysis, models and estimates are often used to predict negative environmental impacts. This creates uncertainty and imprecision. Despite these complexities, regulatory green claims are worth exploring. The purpose of greenwashing rules is not to prevent innocent mistakes or ignore trade-offs, but to deter blatant cheating. The goal is to prevent blatant lies, such as cigarette marketing that once touted the health benefits of smoking.
The good news about this effort is that it is an example of broad and deep public support for environmental protection. Every year, this penetrates more and more into our culture and influences public behaviour.according to Holger:
“Companies are increasingly advertising the environmental benefits of their goods and services. According to NielsenIQ, North American sales of consumer goods with sustainability labels are estimated to grow from $248.1 billion in 2021 to $268.9 billion in 2022.
The academic case for regulating green marketing was published in 2020 by Robin M. Rotman,
Chloe J. Gossett and Hope D. Goldman in a publication by the University of Missouri School of Law.In an article titled Marketing “Organic” Products “No More Greenwashing: The Case for Strengthening Environmental Marketing Regulation”, Their conclusions are:
“Fraudulent and deceptive environmental claims in marketing (sometimes referred to as ‘greenwashing’) are a long-standing problem in the United States despite nearly 30 years of Federal Trade Commission (FTC) Efforts… We made three recommendations. First, we recommend that the FTC increase oversight of non-farm “organic” claims and improve coordination with the USDA. Second, we advocate for inclusion in the next revised FTC guidance Guidelines for “Organic” Claims Use of Environmental Marketing Claims…Finally, we assert that the FTC should formalize the Green Guidelines as binding regulations, rather than in their current form as unsuitable as the USDA has done with the National Organic Program (NOP) regulations. Binding Interpretive Guidelines. The article concludes that stronger regulation of “organic” claims, along with the FTC’s efforts to prevent other forms of greenwashing, will ultimately increase demand for sustainable products and incentivize manufacturers to innovate to meet this need.
These scholars argue convincingly that regulating the use of these terms would increase consumer confidence in them. If consumers believe these claims to be true and then continue to buy “green” products, more manufacturers are encouraged to produce products that have a lower environmental impact.
It will be interesting to see how these new rules affect organizations seeking to capitalize on consumer preferences for greener products. In a typical large company there are many different organizational units with different organizational views and interests in green marketing. Marketing will want to make the broadest, most convincing green statement they can think of. Those who run an organization’s supply chain and manufacturing will focus on the technical feasibility and cost of reducing environmental impacts—including the costs of measuring those impacts and obtaining accurate information from suppliers on sustainability metrics. The lawyers will then focus on the definition of the term “green” contained in the regulations issued by the FTC. The potential for a breakdown in communication between these three groups is by no means trivial, but so is the market for green products.
Advertising, almost by definition, is not oriented toward complete honesty. Watch drug commercials on TV. Obviously, pharmaceutical companies have to explain the side effects of the drugs they are promoting, but ad producers are doing their best to ensure that these negative effects are ignored. Advertising focuses on the benefits of the product, not the cost. The problem with greenwashing is preventing cheating. Yes, pharmaceutical companies are required to report the shortcomings of drugs, but the benefits of drugs had better be real. Green ads could be subject to rules such as drug advertising. The benefits must be real, and the costs should be acknowledged.
Some green ads are hard to fact-check. Products that were once packaged in plastic jars are now packaged in plastic bags that say “85% less plastic than the jars we used to wrap it in”. This may be true, but are jars easier to reuse? Is the plastic in the bag more toxic than the plastic in the jar? who knows?
Despite these difficulties, the most positive part of the greenwashing story is that people care. Consumers want to reduce the damage their consumption causes, and there are forces in business that want to reduce their environmental impact and make money from it. Greenwashing is not a problem if people don’t care about environmental quality.
