As the world faces an escalating climate crisis, some corporations exploit this urgency through deceitful practices known as ‘greenwashing.’ This article explains what greenwashing is, its impact, and how organizations worldwide, including India’s Securities and Exchange Board and the United Kingdom’s Advertising Standards Authority (ASA), are trying to combat it.
The Meaning of Greenwashing
Greenwashing, a term coined by American environmentalist Jay Westerveld in 1986, refers to companies or governments overstating their actions or impact on combating climate change. They often provide misleading information or make unverified claims, capitalizing on the increased demand for environmentally friendly products. Cases of greenwashing range from multinational corporations like Volkswagen, Shell, BP, and Coca Cola to airlines such as Air France, Lufthansa, and Etihad, accused of falsely advertising sustainability of their flights.
Understanding Greenwashing: The Problem
Greenwashing undermines authentic actions against climate change because entities use it to evade genuine environmental standards and gain undue recognition or benefits. The lack of comprehensive standards and regulations for environmental claims allows greenwashing to thrive unchecked, distorting markets by creating an uneven playing field. Greenwashing also presents challenges for carbon credit systems, particularly those in informal markets, where unreliable certification raises questions about transparency and validity.
Global Measures Against Greenwashing
Increased scrutiny of greenwashing has led to global action such as the Kyoto Protocol, which introduced the concept of carbon credits to motivate emission reduction. At COP27, the United Nations Secretary-General called for zero tolerance for greenwashing, urging private corporations to rectify their behavior. The European Union also launched the world’s first green bond standards in October 2023 to battle greenwashing. These legislations support transparency, channeling 85% of funds towards sustainable activities in the EU and attempting to ensure the EU’s transition to climate neutrality.
The Legal Scenario in India
In India, greenwashing falls under unfair trade practices as per the Consumer Protection Act, 2019. The Act outlines penalties and safeguards for consumers affected by such misleading practices. The Securities and Exchange Board of India (SEBI) issued guidelines in February 2023 for issuers of green debt securities to maintain transparency and curb greenwashing. Additionally, the Advertising Standards Council of India (ASCI), a voluntary self-regulatory organization, oversees advertising practices and addresses allegations of greenwashing.
Path Forward: Accountability and Transparency
Moving forward, companies must be held accountable for their environmental actions and lack thereof. Consumers should demand transparency regarding companies’ environmental policies, progress, and challenges while supporting businesses with a verified record of environmental responsibility. Comprehensive regulations and standards for environmental claims should also be enforced to ensure transparency and accountability.
UPSC Civil Services Examination Previous Year Questions
In a previous exam, UPSC prelims questioned the definition of “greenwashing,” correctly stating that it refers to providing a false impression of a company’s products being eco-friendly. Similarly, concerns around “carbon credits” were addressed, clarifying that the system was established in conjunction with the Kyoto Protocol and the goal was to limit the increase of carbon dioxide emissions.