• Dr. Mohan Dewan

 Environmentalism and environmental, social, and governance (ESG) criteria have become important considerations in the present times. However, the concern for environmental degradation is becoming res communis, instead of the environment itself. This has led many businesses to focus on becoming environment friendly by reducing waste, cutting emissions, recycling, and using renewable energy inter alia. Since the number of consumers whose purchasing decisions are swayed by the impact of environment on the products and/or services they purchase, has grown substantially, it has correspondingly led to a growth in advertisers and marketers who seek to leverage on consumer's environmental concerns by highlighting environmentally friendly aspects of products, services, and business practices. Environmental advertising is generally associated with particular goods for individual consumers, such as energy efficient appliances or ‘sustainable sourced’ clothes and has expanded beyond product advertising to individual consumers to B-to-B communications with green commercial consumers inclusive of clean tech products and services.

These ‘environmentally benign’ activities by the company and their often farcical promises and undertakings have led to the coining of the word “Greenwashing”. Greenwashing can be said to be the process of conveying a false impression or misleading information regarding how a company’s products are environmentally sound. It involves making unsubstantiated claims in an attempt to mislead the consumers into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than they actually do. Greenwashing, thus, occurs when a corporation uses environmental rhetoric to increase sales or boost brand image while polluting the environment or declining to spend money on the environment or employee welfare.

The term originated in the 1960s, when the hotel industry devised one of the most blatant examples of greenwashing. This entailed placement of notices in hotel rooms asking guests to reuse their towels to save the environment and ultimately enjoying the benefit of lower laundry costs.

Greenwashing, thus entails the greening of a product, which otherwise isn’t; as was done in the recent Global Investor’s event in Indore, where grass was literally sprayed green, to make it more appealing. In the same endeavour, veganism and “Ghee” have been used as a branding exercise to increase the price point and saleability of a blend of vegetable oils being now sold under the trade name “Vegan Ghee”. Another glaring instance is presented in the form of Volkswagen’s “clean diesel cars”. These cars contained an illegal software (defeat device) designed, to enable the vehicle to cheat emissions tests. A complaint was filed by the Federal Trade Commission in USA, addressing the issue. The National Green Tribunal, in India, addressing the same, fined 500 crores on the local unit of carmaker Volkswagen AG (VW) for damaging the environment by using a “cheat device" in its diesel cars sold in India in the case of Skoda Auto Volkswagen India Private Limited vs. The State of Uttar Pradesh and Ors.

Greenwashing has a dual impact, one being discouraging an environmentally conscious consumer from engaging with sustainable practices and consequent perpetuation of environmentally harmful activities under the guise of conservational activities. This practice thus, causes a far reaching dent on the environment conservation initiatives undertaken by other manufacturer. This practice, when seen in the light of the fact that steering of the common consumer towards environmentally conscious efforts in itself forms a herculean task and the current state of the nature and the planet, becomes more alarming and its effects strikingly conspicuous.

HSBC[2], an overseas bank, recently, got their comeuppance, in the United Kingdom for green washing. HSBC had made claims, in an advert, declaring that it was aiming to provide up to $1 trillion in financing and investment globally to help its clients transition to net zero and that it would help in planting 2 million trees which will lock in 1.25 million tonnes of carbon in their lifetime. Despite the initiatives highlighted in the ads, HSBC continued to significantly finance investments in businesses and industries that emitted notable levels of carbon dioxide and other greenhouse gasses. The United Kingdom’s Advertising Standards Authority noted that the consumers would not be aware of the aforementioned fact, and it therefore considered that it was material information that was likely to affect consumers’ understanding of the ads’ overall message, and so should have been made clear in the ads. It thereby concluded that the ads were misleading as they omitted material information and ordered HSBC to take down the adverts.

This decision by the independent UK watchdog raises questions as to the decision-making process and the considerations taken into account by the watchdog. During the assessment of these 45 complaints, it was noted that the consumers would not know the complexities of transitioning to net zero and would not comprehend that HSBC would be financing businesses which made significant contributions to carbon dioxide and other greenhouse gas emissions and would continue to do so for many years into the future. It is pertinent to note, that the claims made by HSBC entailed, helping companies transition to net zero and planting of trees and not refraining from financing other institutions that may be engaged activities resulting in the emission of greenhouse gases. Moreover, the credibility accorded to the consumer, in this case was discrediting of the consumer, keeping in mind that the customers of HSBC range from individual savers and investors to some of the world's biggest companies, governments and international organizations. This, raises doubt as to the accurate determination of green washing and separating the same from environmentally conscious efforts that may be taken by companies and governments alike and balancing of development with environment conservation.

Pursuant to this, a more conscientious approach is recommended to be adopted, when labelling companies and institutions of greenwashing, with care taken so as to not discourage economically viable activities that promote environment protection and adopting an absolutist approach

[1] MANU/SC/0898/2020

[2] ASA Ruling on HSBC UK Bank plc, https://www.asa.org.uk/rulings/hsbc-uk-bank-plc-g21-1127656-hsbc-uk-bank-plc.html


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