How Corporate Greenwashing Creates the Illusion Companies Are Battling Climate Change

by | May 16, 2023 | Climate & Environment

Consumers must do their homework before determining whether a company is actually green. Victor de Schwanberg/Science Photo Library via Getty Images

How Corporate Greenwashing Creates the Illusion Companies Are Battling Climate Change

by | May 16, 2023 | Climate & Environment

Consumers must do their homework before determining whether a company is actually green. Victor de Schwanberg/Science Photo Library via Getty Images
It is increasingly common for companies to make public claims about the sustainability of their products and business operations—but it’s not always clear how they are actually impacting the environment.

Many corporations claim their products are “green-friendly.” But how do you know if what they’re selling is truly eco-safe? SciLine interviewed Thomas Lyon, professor of sustainable science, technology and commerce at the University of Michigan, on how to buy environmentally sustainable products, whether carbon credits actually work and the prevalence of greenwashing.

Dr. Thomas Lyon discusses the impact of corporate sustainability initiatives.

Below are some highlights from the discussion. Answers have been edited for brevity and clarity.

What is greenwashing?

Thomas Lyon: Greenwashing is any communication that leads the listener to adopt an overly favorable impression of a company’s greenness.

How can the consumer avoid falling for it?

Thomas Lyon: I still love the old concept of the seven sins of greenwashing. The first and most common is what’s called the sin of the hidden trade-off, where an organization tells you something good they do but neglects to tell you the bad things that go along with it.

For example, when you see an electric hand dryer in a public restroom, it may say on it: This dryer protects the environment. It saves trees from being used for paper.

But it neglects to tell you that, of course, it’s powered with electricity, and that electricity may have been generated from coal-fired power, which might actually be more damaging than using a tree, which is a renewable resource. That’s the most common of the seven deadly sins.

Other ones include the sin of irrelevance. For example, telling people that “this ship has an onboard wastewater recycling plant,” when all ships that go to Alaska are required by law to have exactly that kind of equipment. It’s no reflection of the company’s quality.

The sin of fibbing is actually the least common. Companies don’t usually actually lie about things. After all, it’s against the law.

One of the increasingly common forms of greenwashing … is a hidden trade-off between the company’s market activities and its political activities.

You may get a company that says: Look at this, we invested US$5 million in renewable energy last year. They may not tell you that they spent $100 billion drilling for oil in a sensitive location. And they may not tell you that they spent $50 million lobbying against climate legislation that would have made a real difference.

What are carbon credits (or offsets)?

Thomas Lyon: I think the easiest way to understand these may be to step back a little bit and think about cap-and-trade systems … under which the government will set a cap on the aggregate amount of, say, carbon emissions. And within that, each company gets a right to emit a certain amount of carbon.

But that company can then trade permits with other companies. Suppose the company finds it’s going to be really expensive for it to reduce its carbon emissions. But there’s some other company next door that could do it really cheaply.

The company with the expensive reductions could pay the other company to do the reductions for it, and it then buys one of the permits—or more than one permit—from the company that can do it cheaply.

That kind of trading system has been recommended by economists for decades, because it lowers the overall cost of achieving a given level of emissions reduction. And that’s a clean, well-enforced, reliable system.

Now the place where things get confusing for people is that a lot of times the offsets are not coming from within a cap-and-trade system. Instead they’re coming from a voluntary offset that’s offered by some free-standing producer that’s not included in a cap.

Now it’s necessary to ask a whole series of additional questions. Perhaps the foremost among them is: Is this offset actually producing a reduction that was not going to happen anyway?

It may be that the company claims, “Oh, we’re saving this forest from being cut down.” But maybe the forest was in a protected region in a country where there was no chance it was going to be cut down anyway. So that offset is not what is called in the offset world “additional.”

What should consumers make of companies that offer programs such as planting a tree for every widget they sell?

Thomas Lyon: Overall, it’s better that they’re trying to do something than just ignoring the issue. But this is where you, the consumer, have to start doing your homework … and look for a provider that has a strong reputation and that is making claims validated by external sources.

Which rating schemes can people trust?

Thomas Lyon: There’s a cool little app that I like a lot. You can download it. It’s called EWG Healthy Living. EWG stands for Environmental Working Group. It’s a group of scientists who get together and draw on science to assess which products are environmentally friendly, and which ones aren’t. And they have something like 150,000 products in their database.

You can scan the UPC code when you go to the store, and you just immediately get this information up on your phone that rates the quality of the company’s environmental claims and performance. That’s a really nice little way to verify things on the fly.

Are there any examples of business practices that really do benefit the environment?

Thomas Lyon: Building is one big area. LEED building standards or Energy Star building standards reduce environmental impact. They improve the quality of the indoor environment for employees. They actually produce higher rents because people are more willing to work in these kinds of buildings.

You can look at the whole movement toward renewable energy and companies that produce solar or wind energy. They’re doing something that really is good for the environment.

The move toward electric vehicles—that really will be good for the environment. It does raise trade-offs. There are going to be issues around certain critical mineral inputs into producing batteries, and we’ve got to figure out good ways to reuse batteries and then dispose of them at the end of their life.

SciLine is a free service based at the nonprofit American Association for the Advancement of Science that helps journalists include scientific evidence and experts in their news stories.The Conversation

Republished with permission from The Conversation, by Tom Lyon, Professor of Sustainable Science, Technology and Commerce and Business Economics, University of Michigan

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