What is greenwashing

In a simple and clear way, we can define the term greenwashing as a marketing strategy used by some companies claiming to be more environmentally friendly than they really are. It is a deceptive marketing practice that these entities use in their communications or advertising campaigns to try to clean up their business and improve their reputation – taking advantage of consumers' growing environmental awareness.

More and more often we hear about cases of greenwashing in the press; and it is especially concerning as we are increasingly suffering from it as users – affecting our decision making, most of the time without realising it. This is why it is so important to be aware of the concept and to learn how to identify this practice.

At Iberdrola, we are committed to socially responsible management of our activities, and transparency and honesty are fundamental values for this purpose. This transparency is critical in areas such as sustainability, climate action, respect for biodiversity, and the achievement of Sustainable Development Goals, which are fundamental pillars of our work for the energy transition.

What does not count as greenwashing

Before continuing, a clarification is needed: not all environmental communication constitutes greenwashing. A company may communicate partial progress or specific improvements provided it clearly explains their scope, does not present them as more significant than they are, does not omit relevant negative impacts and provides verifiable data to back them up. The key lies in the proportionality of the message, transparency regarding its limitations and the traceability of the information underpinning it.

Greenwashing definition 

The term greenwashing originated in the 1980s, and was coined by environmentalists who began to observe misleading commercial and communication practices in sectors such as hospitality; although it had some precedents such as the concept of "eco-pornography" as early as the beginning of the environmental movement in the 1960s. 

It is a combination of the words “green” and “washing”, referring to a "whitewashing" of a company's image, but in this case in an environmental context – where unsustainable actions are hidden or disguised under a green façade to clean up its business through misleading information. The term emerged as a response to marketing strategies that were seeking to capitalise on growing environmental awareness without a genuine commitment to sustainability.

Common forms of greenwashing

There have been high-profile cases of greenwashing in the communication and advertising campaigns of large multinationals across sectors as varied as oil, fashion, cosmetics, mobile technology, interior design and coffee shop and fast-food chains.

In these cases, companies have disseminated misinformation in various ways. We can categorise them into three groups: 

• In relation to products or services we highlight the use of vague terms to emphasise the positive and conceal the negative; presenting a minor product improvement as something of paramount importance; displaying unclear certifications; or making a point of using packaging, colours or images that suggest sustainability.
• In corporate communications the most notable actions include highlighting a minor aspect as if it represented the company's entire activity; omitting relevant negative environmental impacts; or presenting legal obligations as voluntary initiatives.
• In climate commitments we highlight the practice of setting targets without a clear roadmap; making future promises without detailing the interim milestones needed to achieve them; the use of offsets without explaining their scope or the lack of public monitoring of established commitments.
   

How to identify greenwashing

Sometimes it can be a challenge to unmask greenwashing, but in other cases it is relatively easy using a few simple checks to find out whether or not a company is truly environmentally conscious and engaged in the green transition. 

Questions to identify greenwashed information

• Consistency of message. If we see a particular offer or product calling itself "green" or "sustainable", we should take a look at other products or services from the same company and the messages they advertise with, to see if there is consistency between their environmental message and their actual business practices.
• Inconsistencies or vagueness. It is important to pay attention to the words used to sell something like "green". What exactly does this mean? Sudden changes in narrative, empty words or vague claims without tangible support are signs that could indicate greenwashing.
• Third-party certifications. When someone ensures characteristics of a product or service, such as "renewable", "sustainable", "recycled", "ecological", "local", or through the use of prefixes such as "bio" or "eco", we must demand as consumers some kind of certification or reliable third-party seal of approval, which guarantees that these are not false eco-friendly adjectives. Appearance in sustainability indexes and reports is also valuable.
• Sustainability policies. If we want to go deeper, every large company should have a public sustainability policy that we can investigate to see if they are being 100% honest about their commitments in their advertising. We may also be interested in their annual sustainability reports.
   

Impact of greenwashing

The impact of greenwashing ultimately extends beyond the misleading marketing tactics and the very damage to the environment that is done and hidden. As companies seek to capitalise on the social trend towards sustainability, consumer confidence can be eroded, even more so if they discover they have already been misled. 

This new scepticism towards those who try to sell us their good work for the planet can have very negative consequences, both for the companies in this sector as a whole and for public perception of corporate responsibility and environmental initiatives. As a result, it can have a negative impact on social support for those initiatives and activities that do seek a decarbonised, eco-friendly future in which we do not consume more resources than are available.

Consequences of greenwashing for business

The consequences of greenwashing can be very damaging for companies as a whole in the long term because it damages their credibility and reputation and negatively affects the industry. In addition to losing consumer confidence, companies trying to clean up their image with this type of campaign could face legal action and fines for misleading business practices. A brand's reputation can suffer irreparable damage – affecting customer or business partner loyalty and negatively impacting sales. This is why transparency and authenticity in sustainable efforts are essential to avoid such consequences.

How can companies prevent greenwashing?

Before publishing an environmental claim, a company should maintain a record identifying the exact message, its scope, the evidence supporting it, the methodology used, the period of validity and the individuals responsible for approving it. Marketing, sustainability, legal and compliance teams should jointly review the highest-risk claims.

It is also advisable to set a review date, remove any messages that have become out of date and train sales teams not to unduly exaggerate or oversimplify technical findings.

Consequences of greenwashing for consumers

For consumers, falling into greenwashing traps can result in purchasing decisions based on false information. This not only affects customer satisfaction, but also undermines trust in companies and in sustainability messages in general. Consumers may feel misled and disappointed – leading to increased scepticism and a more rigorous search for information before supporting a company or product that claims to be sustainable and in line with their values.

How to prevent greenwashing

Preventing greenwashing does not rely solely on addressing its consequences once they have occurred, but on incorporating safeguards from the moment any message or campaign with environmental content is designed. Effective prevention combines technical rigour, internal oversight and a genuine commitment to transparency, going beyond strict legal compliance.

Some basic guidelines for preventing greenwashing are:

• Base every claim on verifiable data. No environmental claim should be published without a source, methodology and evidence to back it up, which can be made available to anyone who requests them.
• Precisely define the scope of the message. It is necessary to specify whether an improvement affects an entire product, a single product line, a specific factory or the company's operations as a whole, ensuring that an exception is not presented as the norm.
• Subject high-risk messages to cross-checking. The marketing, sustainability, legal and compliance departments should jointly validate any environmental communication before publication.
• Update and withdraw outdated messages. Setting dates for regular reviews enables the identification of statements that no longer reflect the company's reality and ensures they are withdrawn in good time.
• Make use of external certifications and verifications. Having recognised sustainability labels, audits or indices provides an additional guarantee compared to self-assessment.
• Train sales and communications teams. Those who convey the message to the end audience must be aware of its exact technical limits so as not to oversimplify or exaggerate conclusions that are not supported by the data.

We therefore prevent greenwashing by treating every environmental claim with the same level of rigour as any other sensitive company information – that is, in a verified, up-to-date manner and subject to constant review.
 

Policies to protect against greenwashing

Businesses using greenwashing not only can face reputational damage, but they can also get into legal trouble. From this point of view, institutions in different territories have already taken action to discourage companies from the use of these misleading practices.