Contributor, Korn Ferry Institute
The ‘Greenwashing’ Dilemma
Daniel Goleman is a senior consultant at Goleman Consulting Group: www.golemanconsultinggroup.com, author of the best seller Emotional Intelligence, and host of the podcast First Person Plural: Emotional Intelligence and Beyond. He is a regular contributor to Korn Ferry.
Greenwashing: It’s when a company or organization spends more time and money on marketing themselves as environmentally friendly than on minimizing their actual environmental impact.
The term was coined in 1986 by the environmental activist Jay Westerveld in an essay examining sustainability in the hotel industry. On a trip to Fiji, Westerveld stopped into a sprawling beach resort, where he saw a note asking guests to reuse their towels in order to reduce ecological damage. Meanwhile, he saw just how much waste the hotel was generating and how many new bungalows they were building along the beach without any attention to the environmental impact.
Unfortunately, Greenwashing has become pervasive. In a new survey of close to 1,500 executives—across industries and around the world—the majority said that sustainability was a priority. Fifty-eight percent admitted that their companies were guilty of greenwashing, 68% if you are just looking at the US.
Why all the false advertising?
One obvious reason is the pressure younger generations have put on brands to be environmentally friendly. One survey reported climate change/protecting the environment as the top concern for Gen Z. At the same time, BlackRock CEO Larry Fink, in his 2022 letter to CEOs, stated that the next thousand startups worth $1 billion or more “won’t be search engines or social media companies; they’ll be sustainable, scalable innovators.”
The pressure is on—from the market, from investors, and from the fact of imminent climate change itself.
“The science has been ever more consistent and ever more clear,” says Inger Andersen, executive director of the UN Environment Program. In her opinion, what we need right now aren’t shaky promises, but political courage. “That is what it will take,” she argues, “the ability to look beyond current interests.”
For businesses, looking beyond current interests often means looking beyond the bottom line by prioritizing purpose, values, and environmental goals no matter how uncomfortable (fiscally or otherwise) it gets in the process.
One example comes from the Danish multinational pharmaceutical company Novo Nordisk. When Mads Øvlisen, the former CEO, inherited the company from his father-in-law in 1981, he made purpose a priority and over the next 20 years, made decisions that valued people and the planet even if they didn’t allow the company to grow as quickly as it could have.
While we don't know whether Novo made any false promises over the past four decades, they do demonstrate a consistent track record of addressing their environmental impact. Under Øvlisen’s leadership, Novo invited environmental organizations—many of which had been questioning the company's commitment to its environmental goals since the 70’s—to come discuss their concerns with Novo’s employees. Listening to its critics, the company developed various ways of changing their operations and tracking and reporting on their progress toward being more sustainable.
“Where is it written that you can decide to start your own business and hire all the best talents of society, use society’s infrastructure, or use everything out there without having integrity to pay back?” said Øvlisen in an interview.
One thing is certain - no matter how loudly a firm commits to purpose and the planet, clear goals, clear measurements, and transparency are paramount to their actual success.
This is why last month, the U.S. Securities and Exchange Commission (SEC) put out a proposal requiring public companies to disclose concrete information about their financial exposure to climate risk and their strategies to address it. Last year, the SEC solicited public input on the measure, receiving 550 unique responses. Three-quarters of those responses supported mandatory climate-disclosure rules.
For companies already publishing sustainability reports, this measure would prevent them from leaning too much on anecdotes and aspirations, asking them instead to present hard, verified data. It would allow companies like Cotopaxi, a maker of outdoor gear, to shine in their commitment to measuring and tracking their actual impact. Cotopaxi just proudly announced their second year as climate neutral certified—while their advertising is good, the numbers tell the real truth about their environmental commitment.
My hope is that greenwashing will eventually be easy to detect. Because most people aren’t just concerned about looking like they are saving the environment. They are concerned about actually doing it.