For anyone that is keeping up with the latest in the sustainability sector, a term that is increasingly popping up time and time again is ‘Green Washing’. For those unfamiliar with the term, greenwashing is the practice of companies promoting products or services as environmentally friendly or sustainable, when, in reality, they are not. Many have described it as a marketing tactic used to appeal to consumers who are increasingly concerned about the impact of their purchases and behaviours on the environment. Today, this practice has become a major challenge in the fight against climate change, as it undermines the efforts of everyone, from consumers and activists to corporations and policymakers who are trying to reduce the carbon footprint of individuals and businesses.
According to a report issued by the European Commission last year, 42 per cent of corporate environmental claims made online were false or deceptive; while more than half of online green claims lacked evidence. In another report released by the NewClimate Institute and Carbon Market Watch, net-zero emissions claim from 25 major global companies are highly exaggerated.
Greenwashing is particularly prevalent in the fashion industry, with 59 per cent of green claims made by European and UK fashion brands found to be misleading. Despite pledging to reduce their carbon footprint, many brands are making false claims about their sustainability practices.
In addition to affecting the environment, greenwashing is also detrimental to businesses themselves. In a study conducted by the Harvard Business Review, it was found that customers are highly aware of the gap between a company’s stated environmental goals and actual implementation, which in turn leads to lower customer satisfaction scores and lower corporate performance.
Greenwashing also has significant economic implications. Last year, it was found that ESG funds representing more than $1 trillion in assets aren’t delivering on their stated environmental, social or governance goals. This resulted in the ESG tag being removed from more than 1,200 funds, as it was found that around one in five asset managers are still making misleading claims on the extent to which their allocations are doing the planet or its inhabitants any good.
Recognising the gravity of the issue, the UAE has taken a proactive approach to combating greenwashing. In the construction sector, for example, local governments in the UAE have introduced more rigorous codes such as the Leadership in Energy and Environmental Design (LEED) Rating System for buildings within Dubai and the Estidama Pearl Rating System in Abu Dhabi. In 2010, the Dubai Municipality issued the Dubai Green Building Regulations and Specifications; and in 2017, they were re-issued under the name AL SA’FAT, to support Dubai’s strategic plan of creating a more sustainable urban environment. The UAE's efforts in this area have been recognised by the United Nations, which has commended the country's leadership in promoting sustainable development.
Looking ahead, it is clear that greenwashing remains a significant challenge worldwide. Consumers have proven their vigilance in checking the sustainability claims of products and services and are holding companies accountable for any discrepancies. A report by The Economist found that consumers believed that brands have as much responsibility as governments to create positive environmental change. Another survey by Accenture showed that 83% of consumers believed that it is important for companies to design products that are meant to be reused or recycled. Within this framework, businesses must do more to prioritise sustainability and transparency in their environmental reporting, while policymakers must enact regulations and standards that prevent greenwashing to ensure that consumers continue to make informed and sustainable choices in their lifestyles.
— Mohamed Alhosani is the Chief Sustainability Officer at BEEAH Group.