The rise of ethical investing is not without its fair share of issues. For example, how often have you heard or read about companies claiming to be environmentally friendly, only to discover they are not green later? This is what greenwashing is.
Greenwashing refers to businesses that claim to be environmentally conscious but do not live up to their claims. These companies mislead consumers into thinking they are buying something eco-friendly when they are not.
However, you can take measures to avoid being fooled by greenwashing. Once you understand what is greenwashing, here is how to effectively avoid greenwashing companies.
1. Check a Company’s Environmental Records
About 83% of American consumers are highly concerned with the environmental impact of the products they purchase and find it important that companies should design more products that are environmentally friendly. Therefore, it is important to look at the company’s environmental records to check the impact of a product on the environment.
These records should prove a company’s sustainability claims with adequate and credible data. In addition, a company should keep its website updated on such issues and also update other platforms where they make sustainability claims.
Also, check whether credible third-party certification sources like Energy Star or Carbon Trust Standard can verify the company’s data. This information will help you steer away from greenwashing companies before purchasing.
2. Check a Company’s Clarity on its Products’ Descriptions
Because of greenwashing, most consumers are skeptical about companies’ environmental claims. As such, it is important to check out a product’s description to see whether the company details specific measurement units, certifications, and verifiable endorsements from third-party environmental organizations like Greenpeace.
A company should state a specific amount of an organic ingredient in the product instead of generally claiming that the product is made with organic ingredients. For instance, the product description should say 80% organic cotton instead of just saying it is made with organic cotton.
3. Compare with Other Similar Products
You know what is greenwashing, and falling prey to it is possible. However, comparing a company’s sustainability with its competitor’s product is important. Using a different product may not yield effective results and may mislead you. So, compare only similar products for accurate insight and data on a product’s sustainability.
4. Be Mindful of a Company’s Operations
A company making sustainability claims must be able to back up the claims through its operations. They must intentionally model sustainability through suitable waste disposal, manufacturing, and distribution practices. So, if you look into a company and find its business practices inconsistent with its sustainability claims, you can effectively avoid such greenwashing companies.
5. Look out for Misleading Images on Packaging and Advertisements
Greenwashing companies are known for misleading consumers through their images. Such companies can use a green color or images from nature like flowers or trees to insinuate their eco-friendliness, but that is not the case. So, always be keen on the images a company includes in its advertisements and packaging, especially if the company’s practices do not satisfy its sustainability claims.
Companies deluding consumers into thinking they are environmentally conscious is what is greenwashing. Therefore, it is important to stay vigilant as an investor and use the above measures to avoid greenwashing companies effectively.