Written by Ophela Zhang, a master’s student of chemical engineering at the University of Toronto and a co-op at 5REDO

With increasing awareness on dire environmental repercussions of traditional production and consumption practices, there have been an upsurge in governmental regulations across the globe to reduce carbon emissions and change business as usual. This, alongside with the ever connectedness brought on by the internet and societal consciousness for environmental issues, has put a lot of demand on corporations to change the way they do business so that environmental impacts are taken into consideration. As corporations embark on this path, the issue of corporate greenwashing surfaces.

“Greenwashing involves companies either misleading consumers about the green credentials of a product or service, or misleading consumers about the environmental performance of the company as a whole” [1]. A number of corporations are, or have been, under the scrutiny of greenwashing for reasons that can be broadly categorized as follows:

  • Exaggerating the “environmental friendliness” (e.g. recyclability) of a product/service
  • Lacking in transparency around sustainability progress

This article will discuss the complications associated with each of the aforementioned points and possible strategies for addressing them.

Exaggerating the “environmental friendliness” of a product/service
In February of 2021, Coca-Cola reveled its plan to reduce plastic waste by introducing recycled plastic bottles for some of its products [2]. The plan has received backlash for being an attempt of greenwashing. The arguments are mainly around the point that simply reducing the use of new plastic by around 20% will not make a difference considering that Coca-Cola is the world’s worst plastic polluter. Undoubtedly, plastic pollution is currently one of the major environmental concerns and plastic bottles make up a large portion of this pollution. However, there are a lot more factors at play next to corporations selling products packed in plastic bottles.

Coca-Cola is not a manufacturer of plastic bottles; the company sources the resin used for packaging from a supplier. In order for Coca-Cola to reduce the use of plastic material, or at least virgin plastic, they will need to find new/additional suppliers that would provide that. One of the most straightforward alternatives to using virgin plastic is to use recycled plastic, which is itself a complicated process. According to a study on the Canadian plastic industry done by Deloitte for Environment and Climate Change Canada [3], only 9% of the plastic produced in Canada is recycled in 2016. This small percentage could stem from a combination of multiple factors such as lack of infrastructure and technology, difficulties in separation of different plastic types, low demand for recycled plastics, and lack of societal compliance in recycling. Thus, when there is a significant disproportionality in material availability (new vs. recycled plastic), it poses a challenge for corporations such as Coca-Cola, which produces 3,400 bottles a second [2], to make the switch, and therefore, reducing the use of new plastic by 20% could be argued to be significant, as an initial step.

On the other hand, Coca-Cola’s initiative also includes the introduction of a smaller 13.2 oz bottle along with its rPET (recycled polyethylene terephthalate) version of traditional bottles [2]. The introduction of this smaller bottle undermines, if not completely, the company’s effort in reducing their plastic waste. A smaller bottle will impose more burden on waste collection and recycling systems, which as mentioned before, are already a limiting factor in producing recycled plastic products. In addition, the 13.2 oz bottle will be slightly larger than a can, which could potentially lead to a consumer shift from recyclable, canned containers.

In order to prevent/address the issue of exaggerating the “environmental friendliness” of a product/service, corporations should therefore commit themselves to more than the buzzwords trending right now. Instead, they should take into account the entire life cycle of a product and the players involved in each step. For example, Evian released label-free bottles in July 2020 in their attempt to reduce plastic waste [4]. The labels on bottles are thin plastic films that are more difficult to process in recycling facilities because they have the tendency to clog the equipment; eliminating them is therefore an effective approach in increasing the recycling efficiency.

Lacking in transparency around sustainability progress
Expectations from organizations regarding their sustainability messages are increasing. Businesses are asked more and more to diligently address environmental challenges through strategic business decisions. In 2020, ESG (environmental, social, and governance) investing broke into the mainstream, as it performed relatively steady when the market took a nosedive due to the pandemic [5]. What followed is the concern of greenwashing and false claiming of ESG; in early March of 2021, the U.S. Securities and Exchange Commission (SEC) announced that it was creating a Climate and ESG Task Force to “proactively identify ESG-related misconduct” [6].

However, sustainability reporting is not a straightforward task. Environmental impact can be characterized by a plethora of indices (global warming potential, eutrophication, human toxicity, acidification, abiotic depletion, etc.) and sometimes different indices will indicate opposing results. The EU taxonomy, a classification system that establishes a list of environmentally sustainable economic activities [7], has 593 pages [5] which speaks to the complexity of the issue. Even with such an extensive report, there is still concern whether a one-size-fits-all solution is applicable for sustainable practices.

As such, corporations need to juggle between clearly articulating their sustainability progress with the public and avoiding too extensive or technical details. Regardless, the need for transparency is irrefutable. Large corporations and their C-suites are best at projecting confidence, managing risk, and creating followership [8]. However, without transparency, this will lead to harmful public perception and ultimately loss of market share.

Building the trust
To conclude, corporations are experiencing a critical transition in which they need to consider environmental impacts of their business practices, but often face criticism of greenwashing during this process. Implementing more sustainable practices is not straightforward due to the many parties involved, and being transparent in terms of sustainability progress will become complicated due to the many facets that environmental impact encompasses. However, both of these issues need to be addressed and the strategies/considerations listed below could benefit such attempts:

  • Change current practices within the organization before changing materials that need to be sourced from elsewhere
  • Increase production efficiency (reduce waste or recycle during production)
  • Do not forget about the ultimate agenda of decreasing environmental impact when chasing after buzzwords
  • It is near impossible to find a “perfect” solution that does zero harm to the environment, but it is still better than no change
  • Provide consistent updates on sustainability progress to the public; use data and evidence instead of blank statements

[1] J. Osman, “Greenwashing: the tipping point,” ClientEarth, 2 November 2020. [Online]. Available: https://www.clientearth.org/latest/latest-updates/stories/greenwashing-the-tipping-point/. [Accessed 17 June 2021].
[2] J. Hahn, “Coca-Cola’s plans to reduce plastic waste “simply don’t go far enough”,” dezeen, 9 February 2021. [Online]. Available: https://www.dezeen.com/2021/02/09/coca-cola-recycled-plastic-bottles-pollution/. [Accessed 17 June 2021].
[3] J. Solly, G. Poissonnier, J. Petigny, C. Ménigault, T. Luisce, E. Harscoët, A. David, A. Mitsios, M. Laberge, D. Lysenko, P. Moore and A. Dimoff, “Economic Study of the Canadian Plastic Industry, Markets and Waste,” Environment and Climate Change Canada, Gatineau, 2019.
[4] N. Hitti, “Evian releases label-free bottle made from recycled plastic as it embraces the circular economy,” dezeen, 21 July 2020. [Online]. Available: https://www.dezeen.com/2020/07/21/evian-label-free-water-bottle-recycled-plastic/. [Accessed 17 June 2021].
[5] B. Nauman, G. Tett, P. Temple-West and K. Talman, “Europe’s green taxonomy: the new Basel?,” Financial Times, 19 March 2021. [Online]. Available: https://www.ft.com/content/0b0a043b-f12d-45e7-80fe-a83a594e2f37. [Accessed 17 June 2021].
[6] U.S. Securities and Exchange Commission, “SEC Announces Enforcement Task Force Focused on Climate and ESG Issues,” U.S. Securities and Exchange Commission, 4 March 2021. [Online]. Available: https://www.sec.gov/news/press-release/2021-42. [Accessed 17 June 2021].
[7] European Commission, “EU taxonomy for sustainable activities,” European Commission, [Online]. Available: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en. [Accessed 17 June 2021].
[8] B. River, “The Increasing Dangers Of Corporate Greenwashing In The Era Of Sustainability,” Forbes, 29 April 2021. [Online]. Available: https://www.forbes.com/sites/beauriver/2021/04/29/the-increasing-dangers-of-corporate-greenwashing-in-the-era-of-sustainability/?sh=150b589a4a32. [Accessed 17 June 2021].