Greenwashing Explained: What It Is and Why It’s a Problem

The term greenwashing was first coined in 1986 by environmentalist Jay Westerveld. He noticed a hotel asking guests to reuse towels “to save the planet” while simultaneously expanding its operations into sensitive ecosystems revealing a mismatch between marketing and reality.

Today, greenwashing refers to when companies present themselves as more environmentally friendly than they actually are, often using vague, exaggerated, or misleading claims in marketing, branding, or investor communications.

At a time when climate goals are urgent and global emissions need to be halved by 2030, greenwashing erodes trust, misleads well-intentioned consumers, and gives companies a free pass to delay real action. It also creates unfair market conditions, companies investing in real decarbonization must compete with those simply marketing sustainability.

At first glance, greenwashing and genuine sustainability can look very similar. Both often use the language of climate action, net-zero goals, and responsibility. The key difference lies in substance versus storytelling.

Greenwashing focuses on perception. It prioritizes how a company appears to stakeholders, often relying on carefully crafted messaging, selective data, or vague promises that sound positive but lack measurable impact. Real sustainability, on the other hand, is rooted in action, evidence, and accountability. It requires companies to measure their environmental impact honestly, disclose it transparently, and take concrete steps to reduce emissions over time.

Here’s how they differ:

• Greenwashing: Vague marketing claims
  Real sustainability: Verified environmental data
• Greenwashing: Focused on brand image
  Real sustainability: Focused on emissions reduction
• Greenwashing: Uses buzzwords without proof
  Real sustainability: Uses frameworks like the GHG Protocol, CSRD, and SBTi
• Greenwashing: Exaggerates small improvements
  Real sustainability: Transparently reports real progress

Understanding this distinction is crucial. While greenwashing may deliver short-term reputational benefits, real sustainability builds long-term trust, regulatory resilience, and meaningful climate impact.

• 1986 – “Greenwashing” coined by environmentalist Jay Westerveld
• 2000s – Rise in eco-marketing as ESG enters the mainstream
• 2015 – Paris Agreement sparks global wave of climate pledges
• 2021 – Volkswagen’s Dieselgate scandal challenges sustainability claims
• 2022 – UN releases “Integrity Matters” report with guidelines for credible climate action
• 2023 – EU proposes legislation to crack down on greenwashing
• 2025 – EU expected to finalize and implement anti-greenwashing regulations

Greenwashing isn’t always obvious. In fact, it’s often designed to look and feel like genuine sustainability. As climate concerns grow and regulations tighten, some companies try to appear more responsible than they actually are hoping that good marketing can cover up a lack of meaningful climate action.

Below are ten of the most common greenwashing tactics used today in packaging, ESG reporting, corporate branding, and even investor communications. Understanding these red flags can help you ask better questions, spot inconsistencies, and demand more accountability.

1. Vague terms like “eco-friendly” or “green”

Words like “eco,” “green,” or “planet-safe” sound good but without definitions, evidence, or standards, they’re often just fluff. If there’s no context or data behind the claim, it’s likely meant to persuade, not inform.

2. Misleading imagery (trees, rivers, etc.)

Marketing that features lush forests, clean rivers, or animals often implies environmental responsibility even if the company’s product or service has little to do with sustainability. Imagery alone is not proof of action.

3. Cherry-picking data

A company might highlight one small improvement like switching to recycled paper in their office while ignoring more significant emissions from their manufacturing or supply chain. Selective storytelling is a hallmark of greenwashing.

4. Highlighting one good while hiding the bad

Some brands focus on carbon-neutral packaging or water-saving initiatives while staying silent about fossil fuel investments, unsustainable sourcing, or factory pollution. Transparency means telling the full story not just the good parts.

5. Misusing certifications or labels

Unverified labels or self-issued certifications can make a product look official without actually meeting any external sustainability standard. Always check whether a claim is backed by an independent, recognized body.

6. Overstating carbon offsetting

Carbon offsets can play a role in climate strategies, but relying on them without first reducing emissions is problematic. Offsets must be high-quality, verifiable, and used as a complement to - not a replacement for - emissions reduction.

7. Using “net zero” with no credible plan

Net-zero commitments without interim targets, milestones, or transparency around how emissions will actually be reduced are often hollow. A pledge without a plan is just another PR move.

8. “Natural” or “clean” without definitions

These feel-good terms are often used in consumer products, especially cosmetics, food, and cleaning supplies. But without explaining what makes something “natural” or “clean,” they mean very little and are open to broad interpretation.

9. Comparing unrelated products or processes

Claims like “50% more sustainable” or “greener than before” are often misleading if you don’t know what’s being compared. Going from 2% to 3% recycled content is technically a 50% improvement, but it’s still 97% unsustainable.

10. False recycling claims

Just because something can be recycled in theory doesn’t mean it will be in practice. Materials that require specialized facilities, often unavailable in most regions, are frequently labeled as “recyclable,” even if they’ll end up in landfill.

As sustainability reporting becomes more mainstream, greenwashing has increasingly moved beyond consumer marketing and into ESG disclosures, carbon reporting, and climate commitments. While frameworks and regulations are improving transparency, the growing complexity of ESG reporting also creates opportunities for misleading or overstated claims.

Greenwashing in this context is often less visible, but potentially more damaging. Investors, regulators, and stakeholders rely on ESG data to assess climate risk and progress. When that data is incomplete, unverifiable, or selectively presented, it undermines trust and delays meaningful action.

ESG claims without verified data

Saying a product, service, or company is “climate-friendly” or “low carbon” without presenting measured emissions data is a common form of greenwashing. Credible ESG reporting requires quantified results, clear boundaries, and consistent methodologies, not high-level statements or marketing language.

Lack of third-party validation

Without independent verification or alignment with recognized standards (such as the GHG Protocol), sustainability claims are difficult to assess and compare. Third-party validation adds credibility and helps ensure that reported data reflects reality rather than internal assumptions.

Poor Scope 3 transparency

Many organizations focus on Scope 1 and 2 emissions, which are easier to measure, while downplaying or excluding Scope 3 emissions. In many industries, Scope 3 represents the majority of total emissions. Ignoring it can significantly distort a company’s true climate impact.

Misuse of sustainability frameworks

Referencing frameworks like CSRD, SFDR, or SBTi without fully aligning reporting methodologies is another common issue. Simply naming a framework does not mean compliance. Credible reporting requires applying the framework correctly, consistently, and transparently.

In response to the growing risk of misleading environmental claims, governments and international organizations are strengthening rules and guidance around sustainability communication. These efforts aim to protect consumers and investors while encouraging more honest and comparable reporting.

In the United States, the Federal Trade Commission (FTC) issues the Green Guides to help companies avoid deceptive environmental marketing. The guidelines state that:

• Environmental claims must be clear, specific, and accurate
• Labels should explain whether claims apply to the product, packaging, or a specific component
• Comparative claims must be properly substantiated

While enforcement has historically been limited, violations can still result in legal action, financial penalties, and reputational damage.

The European Union is introducing stricter rules to combat greenwashing across the single market. Under the upcoming directive, companies will be required to:

• Substantiate environmental claims with credible evidence
• Avoid vague or generic terms such as “green” or “eco-friendly” without proof
• Follow standardized disclosure and reporting practices

These rules will affect companies operating in or selling to the EU and will have wide-reaching implications across finance, manufacturing, retail, and supply chains.

The UN High-Level Expert Group on Net-Zero Emissions Commitments published the report “Integrity Matters” to address the credibility gap in climate pledges. The report sets out principles for trustworthy net-zero commitments, including:

• Prioritizing actual emissions reductions over offsets
• Setting clear, science-based targets
• Reporting progress regularly and transparently

The UN has also called for stronger accountability mechanisms and clearer standards to prevent greenwashing at a global level.

A major driver of greenwashing is the lack of globally consistent reporting rules. That landscape is now changing with initiatives such as:

• CSRD (Corporate Sustainability Reporting Directive)
• SFDR (Sustainable Finance Disclosure Regulation)
• ISSB (International Sustainability Standards Board)

Together, these frameworks aim to improve data quality, comparability, and transparency -helping close the gap between sustainability claims and actual performance.

Greenwashing doesn’t always come from a place of deliberate deception. In many cases, it’s a byproduct of market pressure, internal gaps, or misaligned priorities. But regardless of intent, the result is the same: misleading claims that distort progress and damage trust.

Here are the most common drivers behind corporate greenwashing:

Consumer demand for sustainable products

Today’s buyers care about the planet. In fact, 85% of global consumers now factor sustainability into purchasing decisions. Many are willing to pay more for environmentally responsible products, which creates a strong incentive for brands to appear green even if they haven’t made meaningful changes. For some companies, the temptation to “look sustainable” rather than “be sustainable” is too strong to resist.

Pressure from investors

The surge in ESG investing means that companies are under increasing pressure to demonstrate climate responsibility not just to customers, but to shareholders. Billions are flowing into ESG-labelled portfolios, yet many of these funds lack robust standards for validating claims. This has created a system where vague sustainability language can help secure capital, even in the absence of measurable impact.

Lack of internal sustainability expertise

Sustainability is complex and evolving quickly. Many companies simply don’t have the in-house knowledge, tools, or systems to accurately measure emissions, interpret frameworks, or validate their climate claims. Without the right expertise, it’s easy to unintentionally overstate progress or lean on outdated assumptions.

Marketing disconnected from operations

When sustainability messaging is led solely by the marketing team without close collaboration with supply chain, legal, data, or ESG functions the risk of greenwashing rises significantly. Well-meaning copywriters may promote initiatives that sound good, but aren’t aligned with the company’s actual performance or compliance obligations.

Greenwashing isn’t just a marketing issue, it has real consequences. From eroding public trust to delaying climate action, the ripple effects of false or exaggerated sustainability claims are wide-reaching.

Misleads well-intentioned consumers

Most people want to make responsible choices. Many are willing to pay a premium for sustainability, assuming that eco-labeled products have been vetted. Greenwashing exploits this good faith, directing money and attention toward companies that aren’t truly helping the environment and away from those that are.

Damages trust in sustainability as a whole

When green claims are exposed as false, the damage goes beyond a single brand. Consumers and stakeholders may become skeptical of all sustainability efforts, making it harder for credible companies to earn trust and for the industry to move forward with confidence.

Hurts companies making real progress

Genuinely sustainable companies often invest heavily in decarbonization, ethical sourcing, and ESG reporting. But when competitors use greenwashing to tell a better story - without doing the work - they create unfair market conditions. This not only penalizes authenticity, but disincentivizes deeper investment in climate action.

Delays critical climate action

Perhaps the most dangerous impact: greenwashing creates an illusion of progress, allowing companies to delay or avoid real emissions reductions. In a time when climate science is clear and urgent, false solutions waste precious time and stall the momentum needed to reach net zero.

What is greenwashing?

Greenwashing is a deceptive marketing practice where companies exaggerate or falsely claim their products, services, or operations are environmentally friendly. The goal is to capitalize on growing consumer demand for sustainability—without making real efforts to reduce environmental harm. This often involves vague language, misleading visuals, or selective disclosure of facts to create a greener brand image than is warranted.

Why is greenwashing a problem?

Greenwashing undermines genuine sustainability efforts by misleading consumers and creating unfair competition for businesses that are truly committed to environmental responsibility. It erodes trust, confuses the public, and slows down progress toward real climate and environmental goals. In many cases, it allows companies to continue harmful practices behind the mask of sustainability.

How can I spot greenwashing?

Look for these red flags:

• Vague or unverified claims (e.g., “eco-friendly” or “natural” without proof)
• Lack of third-party certification or traceable data
• Overemphasis on minor green initiatives while ignoring larger negative impacts
• Misleading imagery like green packaging, leaves, or nature scenes that suggest eco-friendliness
• Hidden trade-offs (e.g., recyclable packaging for a product with a high carbon footprint)

What are some common examples of greenwashing?

• Fast fashion brands promoting “conscious collections” made with a small percentage of organic cotton while continuing mass production.
• Automotive companies advertising fuel-efficient cars while lobbying against emissions regulations.
• Food brands labeling products as “natural” or “sustainable” with no certification or transparency about sourcing.
• Oil & gas companies highlighting investments in renewable energy that make up only a fraction of their portfolio.

Is greenwashing illegal?

Greenwashing isn't always illegal, but it's increasingly being scrutinized under consumer protection and advertising laws.

• In the EU, the upcoming Green Claims Directive will require companies to substantiate environmental claims with scientific evidence.
• In the U.S., the FTC Green Guides offer guidance on how environmental marketing should avoid deception, with potential legal consequences for non-compliance.
• Globally, watchdogs and advertising standards bodies are cracking down on misleading green claims.

How can companies avoid greenwashing?

To avoid greenwashing, companies should:

• Back all sustainability claims with transparent, verifiable data
• Use recognized third-party certifications (e.g., B Corp, FSC, GOTS)
• Report comprehensively and regularly on environmental impact using frameworks like GHG Protocol or CDP
• Avoid vague language and instead communicate specific, measurable goals
• Foster cross-functional collaboration between sustainability, marketing, and compliance teams

What is the difference between greenwashing and genuine sustainability?

Greenwashing is about perception without action, using misleading tactics to appear eco-conscious.
Genuine sustainability involves measurable, transparent, and long-term commitments to environmental and social responsibility—often verified by independent audits, certifications, and transparent reporting. The key difference lies in accountability and impact.

What are the consequences of greenwashing for businesses?

Companies caught greenwashing face:

• Reputational damage and loss of consumer trust
• Legal penalties or fines, especially in regulated markets
• Loss of investor confidence
• Increased scrutiny from media, NGOs, and watchdogs
• Long-term brand devaluation, particularly among Gen Z and millennial consumers who value sustainability

How does greenwashing affect consumers?

Greenwashing misleads consumers into believing they are making environmentally responsible choices, which can:

• Lead to a false sense of impact
• Distract from real climate solutions
• Reduce consumer confidence in sustainability messaging overall
• Waste consumer resources on products or brands that don’t align with their values

What role do regulations play in preventing greenwashing?

Regulations are key to holding companies accountable. For example:

• The EU’s Green Claims Directive will require companies to justify environmental claims with scientific evidence.
• The UK’s CMA Green Claims Code outlines six key principles to avoid misleading marketing.
• The FTC Green Guides (U.S.) provide guidance for marketers to avoid deceptive claims.
  These frameworks aim to standardize green marketing and protect consumers from misleading sustainability narratives.

Can small businesses also engage in greenwashing?

Yes, greenwashing isn’t limited to large corporations. Small and medium-sized businesses may unintentionally mislead customers due to a lack of sustainability knowledge, proper certifications, or marketing oversight. Regardless of size, transparency and accountability are essential to building genuine sustainability trust.

How can I verify if a company’s sustainability claims are true?

To fact-check green claims, look for:

• Sustainability reports following standards like GRI or CDSB
• Third-party certifications such as B Corp, GOTS, FSC, Fair Trade, Carbon Trust
• Public climate disclosures via CDP or Science-Based Targets Initiative (SBTi)
• Independent resources like EcoVadis, Good On You, or Sustainable Brands
• Consumer watchdog organizations and NGO assessments

What is greenhushing, and how is it different from greenwashing?

Greenhushing is the practice of intentionally under-communicating or withholding information about a company’s sustainability initiatives—often to avoid public scrutiny, accusations of greenwashing, or regulatory backlash. Unlike greenwashing, which overstates, greenhushing downplays environmental efforts. While it may reduce reputational risk, it also stifles transparency and collaboration in the sustainability space.

What industries are most prone to greenwashing?

Industries with high environmental impacts and public pressure often engage in greenwashing, including:

• Fast fashion (e.g., unsustainable production masked by “eco” collections)
• Oil & gas (e.g., fossil fuel firms emphasizing minor renewable investments)
• Automotive (e.g., emissions scandals, misleading “eco” labels)
• Cosmetics & personal care (e.g., claims like “clean” or “non-toxic” without proof)
• Food & beverage (e.g., vague “natural” or “sustainable” claims without supply chain transparency)

At Carbmee, we believe sustainability must be measurable, accountable, and science-based - not a marketing tactic. Greenwashing undermines everything climate action stands for, and we’ve built our platform to fight it head-on.

Why data-driven transparency is the only way forward

Carbmee’s Environmental Intelligence System (EIS™) helps companies calculate, manage, and reduce their carbon emissions across Scope 1, 2, and 3. No assumptions. No guesswork. Just accurate, verifiable data aligned with international frameworks.

How Carbmee empowers companies to avoid greenwashing

We enable organizations to:

• Audit their emissions footprint based on GHG Protocol
• Align reporting with CSRD, SFDR, and SBTi
• Share transparent, defensible sustainability claims
• Identify real reduction opportunities in operations and supply chains

Ready to replace vague promises with real progress? Book a demo to see how Carbmee can help you build a credible, data-backed decarbonization strategy and stay ahead of both regulation and reputation risk.