In the mid-1980s, Chevron’s “People Do” advertising campaign used ads to highlight how they restore nature after exploiting it for oil. However, this claim was misleading since the law already required doing so. Around the same time, Chevron was in the middle of environmentally related legal battles. For example, they paid $1.5 million in penalties for illegally dumping pollutants in Santa Monica Bay. In 1991, chemical company DuPont announced its double-hulled oil tankers with ads featuring marine animals prancing in chorus to Beethoven’s Ode to Joy. It turned out that the company was the largest corporate polluter in the US that year.

Shell faced backlash for its advertisements depicting wind turbines and solar panels despite its significant fossil fuel investments. The imagery created a misleading impression of Shell’s overall environmental impact. In 2015, Volkswagen was found to have cheated emission tests by making its diesel cars appear far less polluting than they are. The car manufacturer admitted to installing ‘defeat devices’ in a variety of vehicles. Meanwhile, the company promoted environmentally friendly and low-emission features of its cars, like inserting a nitrogen oxide trap in the engine and a strengthened particulate filter, in its marketing campaigns. In reality, the US Environmental Protection Agency discovered that 482,000 VW diesel car engines were emitting nitrogen oxide pollutants up to 40 times above the US limit.

In recent years, the cost of misleading sustainability claims has become significantly more tangible. For instance, Deutsche Bank’s asset management arm, DWS, settled with the United States Securities and Exchange Commission (SEC) for a hefty US$19 million in September 2023, following charges of greenwashing.

The European Union is at the forefront of combating greenwashing through a series of comprehensive regulations. In January 2024, the European Parliament formally approved a new greenwashing directive, requiring member states to introduce stricter rules surrounding the use of environmental claims by companies. To achieve that, the EU will ban: generic environmental claims on products without proof; claims that a product has a neutral, reduced, or positive impact on the environment because the producer is offsetting emissions; and sustainability labels that are not based on approved certification schemes or established by public authorities. EU also has the following regulations in place.

1. Sustainable Finance Disclosure Regulation (SFDR): Introduces rigorous disclosure requirements that compel asset managers to report ESG metrics at both the entity and product levels.

2. EU Taxonomy: Provides a clear framework to define environmentally sustainable economic activities by outlining six environmental objectives that activity must contribute to, including climate change mitigation, pollution prevention, and biodiversity protection

3. Corporate Sustainability Reporting Directive (CSRD): Aims to strengthen reporting and disclosure requirements for climate and environmental performance; applies to about 50,000 companies across the EU

4. Sustainability Disclosure Requirements (SDR): Tackles greenwashing by requiring all sustainability-related claims to be “clear, fair, and not misleading;” was introduced by the UK’s Financial Conduct Authority (FCA).

1. Singapore was one of the first countries in the region to introduce a Green Labelling Scheme (GLS) to provide greenwashing regulations, requiring companies to comply with strict eco-labelling criteria to obtain a green label.

2. In 2020, South Korea introduced ESG reporting and disclosure rules to support greenwashing regulations.

3. China’s new Environmental Protection Tax Law imposes taxes on companies for polluting the environment, incentivizing them to reduce their environmental impact.

4. Japan’s Ministry of Environment has launched a Green Claims Guidelines initiative.

5. In India, the Central Consumer Protection Authority has drafted guidelines for Prevention and Regulation of Greenwashing, 2024. Several existing laws and regulatory guidelines implicitly address misleading marketing practices that exploit environmental claims.

To combat greenwashing, increased public awareness, transparent reporting, and stricter regulations are crucial. As a consumer, you can hold companies accountable for their environmental impact and demand proof of sustainability practices. These steps are essential in ensuring that true eco-friendly initiatives are recognized and supported.