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【TEJ Dictionary】What is Greenwashing? Find out the green devil!

After the industrial revolution, human development accelerated; however, the progress of civilization also caused damage to the environment. The climate anomalies are getting increasingly severe, and the world has started to protect the environment and join the ranks of a friendly environment. However, some enterprises are deceiving the public by doing something “not green” in the name of “green.”

Preface

The rapid development of technology has caused a significant burden on the environment, and the increasing emission of greenhouse gases has worsened the situation of global warming. To prevent human development from bringing environmental persecution, the United Nations proposed the United Nations Framework Convention on Climate Change (UNFCCC / FCCC) in 1992 to stabilize greenhouse gas emissions and mitigate the impact of human activities on climate. This is how sustainable development is being implemented. However, during this green trend, there are many cases of “green” companies squeezing in under the guise of “green.”

Keywords: Greenwashing, Environmental protection, Sustainable development

Highlights

📍 What is greenwashing?
📍 What are the greenwashing events?
📍 How to prevent greenwashing?

What is greenwashing?

Greenwashing is a new word that combines “green” and “whitewash.” “green” represents environmental protection and environment friendly. “whitewash” means a company, organization, or product that portrays an image of environmental friendliness and protection, but it is not.

TerraChoice, the environmental consulting division of Underwriters Laboratories (UL), published “seven sins of greenwashing” in 2007, making the concept of greenwashing more concrete.

  1. Hidden Trade-off
    A claim that a product is “green” based on an unreasonably narrow set of attributes without attention to other important environmental issues.
  2. No Proof
    A claim that cannot be substantiated by easily accessible information or by a reliable third-party certification.
  3. Vagueness
    A claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the consumer. “All-natural”, for example, is not necessarily “green”.
  4. Worshiping False Labels
    A claim that, through words or images, gives the impression of third-party endorsement where none exists.
  5. Irrelevance
    A claim that may be truthful, but which is unimportant or unhelpful to consumers seeking environmentally preferable products.
  6. Lesser of Two Evils
    A claim that may be true within the product category, but that risks distracting consumers from the greater environmental impact of the category as a whole.
  7. Fibbing
    A claim that is simply false.

However, the term “greenwashing” can be traced back to 1986, when Jay Westerveld proposed it in an article. It was used to describe the reuse of towels by hoteliers. While reuse is certainly an environmentally friendly and resource-saving act, hoteliers not only over-hyped themselves as caring for the earth but also failed to do anything about the more significant issues, such as waste recycling. However, at that time, the public did not pay enough attention to the point of environmental protection, so the people did not discuss “greenwashing”.

With the popularization of sustainable development, environmental protection has become a hot topic. To keep up with the topic, many businesses are focusing on the marketing of environmentally oriented products, and more and more green products are available in the market. At the same time, many enterprises are actively investing in the corporate transformation to become green enterprises to gain investors’ trust. However, in joint efforts to protect the environment, some unscrupulous businessmen mix in the name of “green” and deceive the public. Therefore, “greenwashing” has gradually been taken seriously by society, and governments and organizations in various countries have accordingly offered regulations and initiatives to prevent greening.

What are the greenwashing events?

To meet the market’s demand for sustainable development, many companies go to great lengths to portray themselves as green companies, even deceiving consumers and investors through misleading packaging. The following section will introduce these proven cases of greenwashing.

  1. Volkswagen installs defeat devices
    A defeat device is anything that interferes with the proper functioning of an emissions control system. It applies to power plants, other sources of air pollution, and automobiles. In 2015, it was revealed that Volkswagen had deliberately installed such a defeat device on its diesel vehicles, which emitted up to 40 times the legal standard for nitrogen oxide pollutants. By using this tactic to portray itself as an environmentally conscious brand, Volkswagen deceived society and paid $30 billion in fines after the revelations.
  2. ExxonMobil’s words don’t match its actions
    ExxonMobil has publicly stated its support for the Paris Agreement. It has touted its commitment to the environment. Yet, in reality, the company’s primary business and capital are still focused on fossil fuels, with only 0.2% of its capital invested in low-carbon energy. In addition, ExxonMobil appears to be a leader in environmental protection by stating its leadership in Carbon Capture and Storage(CCS) in social media. However, it has been pointed out that oil companies will extend the life of their wells by storing carbon in the wells. Instead of achieving the environmentally friendly goal of CCS, it has increased oil production and caused more environmental pollution.
  3. Nestlé’s large number of disposable plastics
    Nestle, as the world’s largest food company, produces a large amount of plastic that is harmful to the environment. The impact of plastics on the environment is very long-term, and plastic particles are left in our environment, so reducing and recycling plastics is an important issue. Nestle has also promised to make improvements but has not set clear goals and timelines, nor has it made any effort to target consumer recycling. There are slogans, but not the proper remedy to implement environmental protection.
  4. Starbucks plastic cup lids
    In 2019, Starbucks responded to the environment by replacing straws with cup lids with a small hole in them. While this may seem to reduce the waste of straws, the new lids actually contain more plastic than the original straws, creating more waste. Starbucks responded that the plastic lids they use are recyclable and can be reused, but according to statistics, only 9% of plastic is recycled worldwide. Therefore, if the plastic recycling rate does not increase, replacing the lids is an action that will cause more damage to the environment.

How to prevent greenwashing?

Climate change is becoming more and more critical, and people are paying more and more attention to the issue of environmental protection. Protecting the environment is something that everyone needs to work on, and companies are using this opportunity to build a good brand image. However, a few companies use this opportunity to deceive the public and commit greenwashing acts.

While we want to do our part to help the environment, we must keep our eyes open! We must check whether these companies or products are environmentally friendly. Although there is no clear definition of “green” and “sustainable” in Taiwan, which makes it difficult for companies to follow and for the public to examine, many international rules can be used as a reference.

  • EU Taxonomy Regulation
    The EU has defined “sustainability” and divided economic activities into six categories.
  1. Climate change mitigation
  2. Climate change adaptation
  3. The sustainable use and protection of water and marine resources
  4. The transition to a circular economy
  5. Pollution prevention and control
  6. The protection and restoration of biodiversity and ecosystems
  • Sustainability Accounting Standards Board(SASB) Standards
    The SASB standard quantifies ESG-related information to facilitate investors’ review and comparison and provides a comprehensive framework for companies to follow when implementing ESG.
▲ 2021 Enterprise use of green power status

Where to get more info?

TEJ TAIWAN DB → TESG Sustainability Solution → TESG Rating Data Bank → Environment → Carbon Analysis & Carbon Indicator

You can get the best-organized ESG-related information.

▲ TEJ DataBase — TESG Rating Data Bank

If you have questions about this article or want further access to the TEJ Database, feel free to leave a comment or email us.

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TEJ 為台灣本土第一大財經資訊公司,成立於 1990 年,提供金融市場基本分析所需資訊,以及信用風險、法遵科技、資產評價、量化分析及 ESG 等解決方案及顧問服務。鑒於財務金融領域日趨多元與複雜,TEJ 結合實務與學術界的精英人才,致力於開發機器學習、人工智慧 AI 及自然語言處理 NLP 等新技術,持續提供創新服務