Governance Explainer Greenwashing

In December, the UK competition regulator revealed it was investigating whether Unilever had overstated how ‘green’ some of its products are.

The Competition and Markets Authority is concerned that some of the Dove and Lynx maker’s claims about how “natural” its products are might be exaggerated and misleading. The watchdog is also troubled by statements about recyclability that do not clearly state whether they relate to all or part of an item.

Sarah Cardell, chief executive of the CMA, said: “The evidence we’ve seen has raised concerns about how Unilever presents certain products as environmentally friendly. We’ll be drilling down into these claims to see if they measure up.”

The regulator’s investigation into Unilever is part of a wider probe into so-called ‘greenwashing’ by companies, which it expanded in January to include consumer goods such as food and toiletries. The CMA is one of a number of regulators scrutinising green claims in different industries, including the UK Financial Conduct Authority, as watchdogs seek to prevent companies trying to falsely capitalise on the growing focus by consumers on environmental issues.

The CMA added: “Problematic claims include the use of vague and broad eco-statements, for example packaging or marketing a product as ‘sustainable’ or ‘better’ for the environment with no evidence.”


Jay Westerveld, the American ecologist, coined the term ‘greenwashing’ in a 1986 essay, critiquing the absurdity of the ‘save the towel’ movement that was prominent in hotels at the time. Westerveld argued the hotel industry’s practice of placing notices in bedrooms promoting reuse of towels to ‘save the environment’ had little to do with reducing energy and more to do with reducing laundry costs.

In the end, the litter and waste around the hotel grounds, as well as the resorts’ extensive building renovations and expansions, proved the environmental initiative was just for show.

Since then, companies from all sectors – including some of the world’s biggest polluters in oil and gas, to those that use vast quantities of single use plastics in the fast-moving consumer goods and retail sectors – have jumped on the greenwashing bandwagon.

However, over the last decade, there has been a concerted effort by companies and investors to pay more attention to environmental concerns, often with a goal of offering ‘green’ products or making ‘green’ investments. Regulators, like the CMA, are also stepping up by launching investigations and levying large fines for false environmental claims on packaging and misleading advertising campaigns.

Uphill Battle

These are valiant attempts to stamp out sleight of hand eco-branding and greenwash marketing. But eco-conscious regulators, investors and companies face a huge battle to turn back the tide of false and misleading ‘green’ claims.

In November, consumer rights organisations in Europe filed a legal complaint against Coca-Cola, Nestlé and Danone – three of the most powerful consumer brand corporations in the world – for the use of misleading ‘100% recycled’ and ‘100% recyclable’ claims on plastic water bottles sold in the region.

Meanwhile, the New York attorney-general, Letitia James, is suing PepsiCo, the fizzy drinks and snacks giant, for waste pollution, saying it had failed to warn consumers about the impact of single-use plastic on human health and ‘misled’ the public about its efforts to combat plastic pollution.

About the author

image of Dr Roger Barker

Dr. Roger Barker

Director of Policy and Corporate Governance, IoD

Dr. Roger Barker is Director of Policy and Governance at the Institute of Directors, and a member of the Management Board. Dr. Barker is the author of numerous books and articles on corporate governance and board effectiveness, including the recent volume: ‘The Law and Governance of Decentralised Business Models: Between Hierarchies and Markets’ (Routledge, 2020). He is a former member of the European Economic and Social Committee and the founder of a successful corporate governance advisory company. A former investment banker, Dr. Barker spent almost 15 years in a variety of equity research and senior management roles at UBS and Bank Vontobel, both in the UK and Switzerland. He has a doctorate from Oxford University and taught politics at Merton College, Oxford (2005-2008).

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