This trend has led to the development of numerous “green marketing” strategies, aimed at focusing consumer attention on specific environmentally friendly qualities of products or businesses, such as the use of recycled materials, non-toxicity, biodegradability, absence of pollutants, lack of animal testing, and so on.
The rapid success of this new approach soon led to its abuse via the phenomenon known as “greenwashing” (a word coined by combining “green” and “whitewashing”), which has become increasingly widespread.
What does “greenwashing” mean?
The term “greenwashing” was introduced in the 1980s, following a controversial case involving the oil company Chevron. In order to convince its customers that Chevron was more concerned with environmental issues than its competitors were, the company commissioned a series of expensive TV commercials suggesting that company’ employees were actively engaged in protecting wildlife (such as bears, butterflies, and turtles). The advertising campaign was so successful that it won Chevron more than one award and became a case study at Harvard Business School.[1]
However, the misrepresentation that the advertisements aimed to convey was soon exposed by environmentalists, who made Chevron’s actions the prime example of greenwashing. Chevron thus was identified as the first in a long line of companies, industries, and organizations to misappropriate environmental virtues in order to burnish its corporate reputation by highlighting positive efforts and diverting attention from its negative impact on the planet.
Greenwashing in practice
Today, greenwashing is a widespread practice used by brand marketing and businesses to appeal to customers who care about the environment by using green imagery and buzzwords like “eco-friendly” and “all-natural.” Such claims are typically used to divert attention from a company’s somewhat questionable environmental record. Also, companies may exaggerate or emphasize certain positive traits of their products or manufacturing processes as if they are particularly virtuous, even though they are mandatory under law.
In some countries, misleading claims such as these are either expressly prohibited by law (as is the case in Australia[2]) or are strongly discouraged by government through the oversight of agencies or authorities, which often publish guidelines promoting the protection of competition and consumers (as is the case, for example, in Canada, Norway, and the United States).
In Italy, until 2014 there was no explicit policy reference to the greenwashing phenomenon, but any false or inaccurate statements produced for the purpose of increasing sales were (and still are) subject to antitrust oversight and sanctions. This falls under “misleading advertising,” governed by Articles 21 and 22 of the Consumer Code (Legislative Decree 206 of 2005).
In March 2014, the Italian Advertising Self-Regulatory Body (IAP) in the 58th edition of its Self-Regulatory Code first mentioned the abuse of wording referring to environmental protection by amending Section 12:
“Advertising claiming or suggesting environmental or ecological benefits must be based on truthful, pertinent, and scientifically verifiable evidence. Such advertising must ensure a clear understanding of which aspect of the product or activity the claimed benefits refer to.”
In addition to this, numerous guidelines that provide guidance on environmental claims have been published in recent years: OECD Guidelines for Multinational Enterprises (2011); Guidance for the implementation/application of Directive 2005/29/EC on unfair commercial practices (2016); ICC Framework for Responsible Environmental Marketing Communications (2019).
The main indications of these guidelines can be summarized as follows:
- representation must be truthful and honest;
- a claim must be supported by scientific and reliable data;
- comparative advertising must be specific and based on clear grounds;
- a claim must be limited to the life stages of the product for which there is scientific evidence to support the claim;
- symbols and logos used must be clear and not confusing.
Most recently, in 2019 the European Union published the European Green Deal “a new growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use.” In parallel, the EU proposed a European Climate Law to turn this political commitment into a legal obligation.
Sanctions applied to greenwashing practices
In Italy, companies that engage in greenwashing may encounter not only the prohibition of further dissemination of their commercial communication, with a penalty applied for noncompliance and an order to publish the relevant decision, but also sanctions from the Italian Competition Authority (ICA) of up to 5 million euros.
This has been the case for many companies operating in different sectors (beverages, food, cosmetics, cleaning, automotive) that over the years have been fined by the ICA for making misleading environmental claims.
In 2015, one of the ICA’s major investigations into the misrepresentation of eco-friendly attributes was launched in relation to what has come to be known as the Dieselgate scandal. The authority’s scrutiny was focused on Volkswagen’s marketing practices in the Italian market. Since 2009, the company had sold diesel vehicles whose polluting impact was promoted as being much lower than that of its competitors’ vehicles. The car company also published advertising catalogues in which it claimed to be very concerned with the emission levels of its vehicles.
The ICA considered this conduct capable of distorting consumers’ choices, “inducing them to make a consumption choice that they would not otherwise have made if they were aware of the real characteristics of the vehicles purchased.” Accordingly, it imposed a sanction in the form of the maximum fine of 5 million euros.
However, the first ICA measure that explicitly addressed greenwashing practices was a sanction imposed on the Italian oil and gas company Eni, an industry leader that was also fined the maximum amount (5 million euros) for unfair commercial practices regarding environmental claims.[3] The proceedings specifically related to Eni’s commercial practice of circulating advertising messages and information to promote Eni Diesel+ fuel that focused on (a) the positive environmental impact of using the fuel and (b) the characteristics of the fuel, in terms of consumption savings and reductions in greenhouse emissions.
The ICA held that “[t]he so-called environmental or green claims, aimed at suggesting or evoking a minor or limited environmental impact of the product offered, have become an important advertising tool capable of significantly influencing the consumers’ purchasing choices, due to the latter’s increased sensitivity toward these issues. For this reason, they must report the environmental benefits of the product in a precise and unambiguous way, be scientifically verifiable, and, finally, be communicated correctly.”[4]
Conclusions
The increasing influence of environmental issues on brand popularity provides fertile ground for violations, which must be addressed to protect not only the environment, but also consumers and, ultimately, the market.
Greater results could be achieved by making eco-labels and certificates attributed to products, such as those introduced by the EMAS Regulation and ISO 14000 standards, more prominent.
In any case, protecting consumers from commercial communications that misleadingly advertise environmental benefits requires not only the adoption of stricter national and supranational regulations, but also more pervasive control on the part of the antitrust authorities in order to direct consumer choices toward clearer, more transparent, authoritative, and scientifically sound data.
[1] Chevron Commercial Ad (1985) https://youtu.be/cpm00Z9PXzk.
[2] The Trade Practices Act of 1974 forbids misleading environmental claims with fines of up to 6 million dollars.
[3] More information on the fine imposed on ENI can be found in our previous article: https://portolano.it/newsletter/portolano-cavallo-inform-digital-ip/the-italian-competition-authority-hits-the-italian-oil-and-gas-giant-eni-with-the-highest-possible-fine-in-a-greenwashing-advertising-case-
[4] Decision No. 28060 of December 12, 2019.
