What is Greenwashing and Why are Consumers Catching Up to it?

Greenwashing is a tactic used by organisations to market their products and services as “environmentally friendly”, ethical, and “eco”. It often misleads consumers when it comes to the reality of business operations, and fails to substantiate what “being green” actually is.

When we think about greenwashing, our minds typically turn to fast fashion companies, corporate giants, and international conglomerates. In truth, SMEs are just as susceptible to greenwashing as larger businesses are; with little regulation (or “good example” leaders, for that matter), consumers have, in many ways, become the first point of call when it comes to holding SMEs accountable. 

In the wake of COP26, greater public awareness has been ushered in by a wave of anti-greenwashing legislation and media coverage with the Chancellor announcing that mandatory Sustainability Disclosure Requirements (SDR) for large financial firms will become law in April 2022. Aligned with the Task Force on Climate-Related Financial Disclosures, the law (which also applies to pension schemes) enforces greater transparency by requiring firms to set out the environmental impact of financial activities, publish their net-zero transition plans, and report against the UK’s new green finance rulebook. 

While the SDR only targets this specific sector for now, its introduction accompanies an influx of crackdowns from the Advertising Standards Authority and a growing list of major campaigns against the false environmental claims made by some of the world’s most recognisable brands. Given that around 70% of the UK public want their money to go towards making a positive difference to people or planet and 28% of SMEs have been asked by customers to reduce their environmental impact (up from 12% in 2016), it is unsurprising that this coverage has not only compelled consumers to catch up to greenwashing, but enabled them to take on their own role as accountability-holders.  

At the SME level, the lack of “good example” leaders, existing legislation, expertise, time, and money might seem, at first glance, like an impossible hurdle to overcome. The marketing switch to greenwashing might be preceding the fundamental mindset shift that could prompt genuine climate action. What we are actually seeing, however, is an opportunity for SMEs to lead the way. 

Running in tandem with consumer demands is small businesses’ proximity to local communities, their capacity for skill and best practice sharing, and the chance to implement structure and routine so that claims can be backed by transparency and action. 

SMEs can combat greenwashing with tools like our carbon management platform, Climate Essentials, which is specifically designed to be accessible and affordable. We provide the bottom-up data needed to show consumers that businesses are unafraid to not only be honest about their operations, but commit to enacting real change by reducing their carbon emissions. 

Climate Essentials transforms generic, unaccountable claims of “sustainability” and “greenness” into something tangible - carbon emission figures, actionable reduction strategies, and clear pathways to net zero. In this way, carbon accounting becomes a new mode of “business as usual”. Much like SMEs conduct financial accounting, comply with health and safety policies, and determine their legal structure, understanding, measuring, and acting on business carbon data will be an essential opportunity for transparency and integrity in the ever-growing fight against greenwashing.

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Ella Nevill - Client Engagement Manager