Commercial Issues That You Should Know More About: Greenwashing

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Image courtesy of Eco-Insider.

A few months ago, I came across an article on the Financial Times about greenwashing. This was a term that I had never heard of before, and it is not one that you often see making headlines. I decided to investigate this further.

Why is this issue important?

Commercial awareness is not only about knowing the latest news and headlines, but it is also about knowing how businesses work, the markets they operate in, and the challenges they face. Climate change is one of the few threats that is prevalent across markets of all shapes and sizes.

The current consumer is much more aware of the dangers of climate change than the average consumer 15 years ago. As consumers are becoming increasingly aware of their own environmental impact, research shows that this has affected general consumer trends and spending patterns. In other words, consumers are increasingly opting for environmentally-friendly products or services.

Furthermore, terms such as ‘carbon neutral’ (which used to be considered as merely environmental jargon) are becoming household terms and are playing an increasingly significant role in company and government policies. For example, the UK Government has pledged to become carbon neutral by 2050.

While many companies have made genuine efforts to reduce their carbon footprint, the recent climate awareness movement has also provided some opportunities for commercial gain.

How can businesses benefit from the climate change movement?

By adopting eco-friendly trade policies and launching innovative schemes claiming to save the environment, businesses are ensuring that they stay in the consumer’s good books and still continue to maintain a competitive market share. Here are a few examples:

  • Starbucks: All customers who bring in their own reusable cup will receive a 25p discount off a Starbucks coffee.
  • Adidas: In collaboration with Parley, a nonprofit organisation dedicated to removing plastic from oceans, Adidas has launched a line of 100% recyclable trainers made from ‘upcycled marine plastic waste’.
  • H&M: Now a decade strong, each year H&M launch a new fashion collection to celebrate sustainable fashion. The ‘Conscious Exclusive’ collection consists of garments made from recycled materials such as brass, plastic bottles, and waste cotton. The collection is sold online and in-store.

More importantly, companies, governments, institutions, and other businesses that are not seen to be shifting their weight are facing extreme consumer lash back (as we will see later on in this article).

The rise in popularity of other eco-friendly financial measures such as green bonds are also worth noting. But this is a topic for another day.

Here is an interesting article on how some major companies have taken steps to reduce their carbon emissions.

So, where does greenwashing come into play?

The best way to answer this question is to take a quick whistle-stop tour of greenwashing.

Surprisingly, the term ‘greenwashing’ has been around for much longer than you’d think. Made popular in 1986 by Jay Westerveld, a well-known environmentalist, the term ‘greenwashing’ soon became the first port of call for environmental activists in campaigns against major companies and institutions.

So, what does greenwashing actually mean? According to Investopedia, greenwashing is defined as ‘the process of conveying a false impression or providing misleading information about how a company’s products are more environmentally sound’. Greenwashing covers a wide range of corporate behaviour, but it can largely be said to be used as a marketing technique to maintain or draw a larger consumer base.

Please let me emphasise a point here. Not every example of a company or institution taking eco-friendly steps is an example of greenwashing.

Greenwashing is more about the façade of taking such steps. This can take place in many forms: it can be a blatant lie, twisting the truth, or it can appear more subtly to divert attention away from the company’s carbon emission levels. Below are some case studies which illustrate this point further.

Applying greenwashing to commercial events:


In a recent advertising campaign, the Irish airline company claimed that they had the “lowest carbon emissions of any major airline”. Since the aviation industry emits 2% of all human-induced carbon, this is a pretty bold statement.

Amongst other factors, this claim was based on the amount of CO2 emissions per passenger per kilometre flown, and that the airline had the highest proportion of seats filled on flights. However, the Advertising Standards Authority (ASA) found that Ryanair’s claim was based on research conducted in 2011 and that this information is no longer fit to continue serving its purpose in 2020. As a result, the ASA banned the advert on the basis that it was misleading consumers.


Some instances of greenwashing are not as obvious as the previous example.

If you’d like a quick refresher about the Saudi Aramco IPO, then have a look at one of my previous articles which you can access here.

The primary aim of an IPO is to make money (capital). Usually the capital is then reinvested back into the company to progress its financial development. At it’s core, capital flows in a cycle like this:

We know that the recent climate awareness movement has led to two significant developments:

  • A heavy backlash against the oil and gas industry; and
  • Increased funding and investment in other renewable energy resources (wind farms, water dams etc).

Both of these developments are not great news for Saudi Aramco, who in recent years has been suffering financially, and thus was well in need of a cash injection. The backlash against the oil industry has caused severe damage to Saudi Aramco’s reputation, and to make matters worse, recent studies show that Saudi Aramco has the highest carbon emissions of all companies in the world! This gives eco-protestors significant ammunition against the state-owned oil company.

Image taken from an article featured on The Guardian, which can be accessed here.

These findings seem to be quite a far stretch from Saudi Aramco’s claims, repeatedly made in the view below, that the oil company’s emissions are ‘among the lowest in the industry’.

Furthermore, increased global investment in alternative energy resources has only catalysed the inevitable. After all, oil resources are limited. Once they’re gone… they’re gone. As a result, it’s understandable why Saudi Aramco needed to score a few green points…fast!

This is where the Saudi Aramco Vision 2030 Program, and more importantly, the IPO step in. In a nutshell, the Vision 2030 Program was an attempt to rebrand the oil-rich kingdom in light of the world’s decreasing favour of fossil fuel. One of the core pledges made in the Program was that the Saudi Kingdom will invest more money to transition to the renewable energy market.

Now, let’s go back to my earlier point where I briefly explained the aim of an IPO and the role capital plays in the growth of a company.

Here is the paradox: why raise money to invest back into a company with the world’s highest carbon emissions if the kingdom has pledged to move away from this?

Is the kingdom planning to turn Saudi Aramco into the next biggest renewable energy company, or is money being raised to protect Saudi Aramco from the inevitable? I will leave the debate up to you.

All that is left to say on this matter is that many critics argue that the Saudi Aramco IPO is one of, if not, the biggest, and most successful, greenwashing campaigns in history. For more information, here is an interesting read on the topic.


This case study is not strictly speaking an example of greenwashing, but rather an illustration of what happens when a major institution fails to take sufficient steps to employ an eco-friendly business policy.

Earlier this year, Barclays faced numerous rounds of criticism with regard to their investment strategy. The shareholders of one of Europe’s biggest banks protested against Barclays’ investment in fossil fuel projects due to the current climate crisis.

How did this all start?

The Paris Climate Agreement was a major conference in 2015 between 197 countries attempting to find a solution to tackle climate change. It was widely considered as a major turning point in the climate change crisis, and was a weighty contributor to the increasing pressure against companies and institutions to adopt eco-friendly policies. Furthermore, the Paris Climate Agreement led to the increased scrutiny towards businesses and companies situated in markets with high carbon emissions such as oil and gas production (eg; Saudi Aramco).

(Here is a site listing the key agreements in the Paris Agreement).

As a major financial institution, it therefore comes to no surprise that Barclays was also closely watched under the public lens. According to an article on The Independent, Barclays has invested $85bn in fossil fuel firms and carbon-intensive projects since the Paris Agreement. This has not gone down well with major shareholders and international charity, Share Action, who have taken steps to challenge this. Have a look at this page for more information.

The shareholder discontent is set to be addressed at the next Barclay’s annual meeting which will be held in May. For now, it’s a waiting game.

Keeping it squeaky green!

Greenwashing comes in all shapes and sizes. The irony with this is that greenwashing almost always concerns issues that are brushed under the carpet. Therefore, it is really important to understand the scope of this concept before attaching it to any commercial issues.

If you would like to read more about greenwashing in the commercial context, have a look at ‘Greenwash: Big Brands and Carbon Scams’ by Guy Pearse. This book provides many interesting examples across a wide variety of industries and markets on the evolution of greenwashing.


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