According to Will Keaton, an NYU’s expert economic scholar, ‘Greenwashing’ is the process of conveying a false impression or providing misleading information about how the products of a company are more environmentally sound. Greenwashing is considered an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly. This practice is often spotted in developed markets that have an increased demand for sustainable and socially responsible products.
At a glance, companies that do greenwashing might think that this practice is profitable as they can save on actual supply chain improvement to make it greener and socially responsible. Clothing companies can claim that they are recycling their products, while the truth is they only recycle 1% of their products, or food companies can claim that their products are organic whilst still applying harmful chemicals to their products. There are many more practices that unethical companies have to save costs and increase sales. Yet, studies have shown another side, where Greenwashing might actually jeopardize the brand reputation and harm company revenue in general. Let us have a look at how consumers actually react to such practices.
From a study titled ‘Different Shades of Greenwashing: Consumers’ Reactions to Environmental Lies, Half-Lies, and Organizations Taking Credit for Following Legal Obligations’ by Menno D. T. de Jong, University of Twente Netherlands, the researcher is testing three hypotheses, which are :
Hypothesis 1: Green organizations generate higher scores on reputation than do organizations guilty of behavioral-claim greenwashing.
Hypothesis 2: Organizations that have initiated environmentally friendly behaviors themselves generate higher scores on reputation than do organizations guilty of motive greenwashing.
Hypothesis 3: Behavioral-claim greenwashing has a larger negative effect on reputation than does motive greenwashing.
The study concluded that for organizations that want to implement environmentally friendly policies and use their green positioning as a reputational asset, it found that only honest and transparent communication about environmentally friendly behavior pays off. Telling half-lies about green activity does not prove to be significantly better than telling lies about it. Only a truly green positioning can be beneficial. Also, organizations’ reputation will not benefit from their environmentally friendly behaviors when they are merely taking credit for complying with legal obligations.
To put in simpler terms, the study shows that greenwashing practice, even if it’s only partial or unintentional (i.e boasting of being green or sustainable even though the company only complies with the regulation) does affect customer perception to the company and the product in a negative way. Hence the bottom line is that it also affects the sales and performance of the company in general.
From the study we learn that companies with actual action behind their claims are the ones that reap the benefits for the positive response from their customers. The question then leads to how can a company become truly green, sustainable and/or socially responsible?
They can by simply being truly transparent and verifiable for sustainability or social good claims.
With difficulties in the industry, Gratitude offers a solution that can make this process easy and verifiable with the power of blockchain. Through Gratitude, companies have the tool to reveal their supply chain and stories behind the product and consolidate them all in a QR code or links that can be embedded on the companies social media, physical products, in stores or via other marketing campaigns that can attract customers to learn about the products they buy.
Begin your business’ true transparency journey by implementing Gratitude to unlock the hidden value of your supply chain data. Talk to one of our representatives in the following channels for support or assistance in implementation:
Website : https://more-gratitude.com
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