Transparency and accountability are key to solving the climate crisis. Unfortunately, greenwashing results in the opposite.
While many businesses have made commendable progress with green initiatives, the consequences of greenwashing can be severe. Some companies have knowingly or inadvertently greenwashed stakeholders, leading to a worsening climate crisis. At times, the technology industry has also been guilty of greenwashing.
2023 was a year of record high temperatures, and the United Nations has warned that the world will face a hellish climate if efforts to cut emissions don’t accelerate.
This article deep-dives into greenwashing, how to identify it, and how to tackle it so that technology companies can do their part to protect the climate.
What Is Greenwashing?
Greenwashing refers to false or misleading information regarding a company’s sustainability. It may involve unsubstantiated or hyperbolic claims about the environmental impact of products or initiatives that mislead consumers or stakeholders.
Think of it as false advertising about a company’s green initiatives or emission reduction. It may be done to convey an eco-friendly image of the company or to divert attention from its involvement in practices that are bad for the environment.
Basically, companies guilty of greenwashing deliberately hide information about their overall impact on the environment.
Although the term greenwashing has become more common recently, its origin goes back to 1986. Environmentalist Jay Westerveld came up with it at the time, blaming hotels for it. Fast-forward to today, and it’s not just hospitality—nearly every sector is guilty of it in some way.
Why Is Greenwashing Bad?
Greenwashing is a serious problem with serious consequences. It impacts the organization, its stakeholders, the city or country it operates in, and the environment.
But let’s look at the risks of greenwashing more closely to understand the extent of its impact better.
Environmental Damage
If a company makes big claims about its environmental performance but is not actually making the impact it boasts, climate is the loser in this situation. On the surface (through the claims or programs), it seems as if the company is making an effort that should ideally help cut emissions. However, the opposite is happening.
Greenwashing results in inaccurate carbon accounting, which, in turn, throws off target-setting. Companies can’t set realistic, actionable targets without accurate emissions data.
In other words, greenwashing sets the environmental movement back by creating this mirage of positive change when, actually, the change is insignificant (or worse, hides even higher emissions).
Reputational and Financial Damage
With governments enacting stricter regulations and climate advocates highlighting greenwashing, consumers demand more transparency. As a result, it’s becoming harder for companies to get away with greenwashing.
It can lead to long-lasting reputational damage that may be hard to recover. It can also cause financial damage, lower sales, and stock price slumps.
Reporting and Compliance Issues
Large corporations must report ESG (environmental, social, and governance) data annually. Any discrepancies in the data can result in compliance issues and even fines.
Environmental reporting regulations have become more stringent over the years. Any traces of greenwashing can lead to formal investigations and fines. Many big names have been fined for not reporting or underreporting environmental data. For instance, Toyota was fined a whopping $180 million for violating emissions reporting requirements per the US Clean Air Act.
The European Union has introduced legislation directly targeting greenwashing. It has banned false claims about products and their sustainability and introduced an accountability system that verifies any claims. It’s also working to promote consumer’s right to repair, which will directly impact hardware manufacturers.
Greenwashing in the Tech Industry
The tech industry’s environmental impact is underreported and overlooked. Although it makes up two to three percent of global emissions, its share is growing. If unchecked and uncontrolled, its emissions are expected to grow 30% yearly.
With that in the backdrop, greenwashing becomes a serious matter. Sadly, many companies have been found to make claims they can’t substantiate over the years. In a Google report, 58 percent of executives anonymously admitted that their companies are guilty of greenwashing.
The tech industry has a significant carbon footprint, from data centers that draw huge amounts of energy to electronic devices that emit harmful gases when disposed of improperly. And greenwashing isn’t doing it any favors.
Tech companies use different types of greenwashing to make consumers think they’re doing their best to tackle climate change and cut emissions.
Data center operators often claim to use renewable energy in their data centers. However, it’s challenging (and in some places impossible) to account for how much of the actual energy was from renewable resources if they’re buying it from utility companies.
Similarly, hardware manufacturers promote new appliances as energy-efficient. At the same time, they make it hard to repair old ones and release replacements quickly, pushing consumers to refresh unnecessarily.
Even big names like Apple have been at times accused of greenwashing.
Technology and Its Role in Combatting Greenwashing
Interestingly, enterprise IT greenwashing can be tackled with technology. In other words, technology is the answer to technology’s greenwashing problem. Although technologies like Artificial Intelligence (AI) have a notoriously high carbon footprint, these technologies can improve carbon accounting.
Data is at the heart of eliminating greenwashing. A lot of companies that greenwash consumers do so because of a lack of data. But if data can be procured and processed, those claims can be verified.
Innovation in carbon accounting technologies is also helping to target greenwashing. Better software solutions that comply with the latest standards allow emissions data to be processed more accurately.
With better technology, greenwashing can become increasingly easy to detect and challenge. Companies can better understand their carbon footprint and make ‘real’ efforts to reduce emissions.
How Can Tech Companies Avoid Greenwashing?
Tech companies, like any other business, are susceptible to falling into the trap of greenwashing. Here's how to avoid greenwashing and demonstrate genuine environmental commitment:
Science-Backed Initiatives
Move beyond vague claims. Instead, tech companies should prioritize initiatives with clear metrics backed by science, such as reduced energy consumption in data centers or increased use of recycled materials in hardware.
The Science-Based Targets Initiative (SBTi) provides detailed guidelines for the information and communication technology (ICT) sector, aligning with the global climate goal of limiting temperature rise to 1.5 degrees Celsius.
Clarity and Transparency
Ditch vague terms like "eco-friendly" or "sustainable." Instead, clearly explain the company's environmental practices. For example, instead of saying "sustainable packaging," explain how the packaging uses recycled materials or is biodegradable.
Instead of resorting to fake claims, keep your approach realistic and achievable. Transparency about ongoing efforts and areas for improvement builds trust with consumers who value a commitment to sustainability, even if the journey takes time.
Third-Party Verification
Having environmental claims verified by independent third-party auditors adds credibility. These audits assess the company's practices against established environmental standards. You can also go for third-party assurance for your ESG reports—a move not required but highly recommended to eliminate any allegations of greenwashing.
Offset as the Last Resort
The most effective environmental strategy is to reduce a company's environmental impact at the source. This could involve using renewable energy sources for data centers or designing products for lower energy consumption.
Carbon offsets, which involve investing in projects that remove carbon from the atmosphere, can be useful. However, they should only be used to address unavoidable emissions after all efforts have been made to reduce them.
How PivIT Targets Greenwashing
At PivIT, sustainability isn’t a buzzword but a core principle of business. As a procurement services provider for IT infrastructure, PivIT ensures that it works with OEMs that value transparency and don’t make unsubstantiated claims about their products. We frequently test products to ensure their performance matches the OEM's claims.
In addition to our commitment to working with OEMs that prioritize sustainability, we promote sustainable IT with our maintenance product and buyback program. With OneCall, enterprises can extend the life of their equipment and maximize their use, bringing down their indirect emissions (‘purchased goods’ category). The buyback program saves equipment from ending up in landfills, reducing electronic waste.
Learn more about our sustainability goals and efforts!
FAQs
Is greenwashing illegal?
Greenwashing isn’t illegal everywhere, but countries are beginning to adopt legislation that punishes it. That said, any deceptive or false environmental claims can also be considered false advertisements, which are illegal in many parts of the world. False claims and inaccurate reporting of environmental data can result in fines reaching millions of dollars.
Are there penalties for greenwashing?
Greenwashing can result in heavy penalties, as false claims about a product or service's environmental impact may count as false advertisements. Similarly, underreporting or wrongful data reporting may also be considered greenwashing and violating environmental regulations. Companies that are guilty of such behavior can be prosecuted and fined.
How can we detect greenwashing?
As a consumer, beware of vague terms like ‘eco-friendly’ and ‘sustainable.’ Look for clear metrics and data to support environmental claims. If a company focuses heavily on offsets rather than reducing its environmental footprint, that could be a red flag. By researching, you can avoid falling victim to greenwashing.