Consumer Perspectives on Greenwashing & Building Brand Authenticity
Growing consumer interest in sustainability has seen sustainable products outpacing conventional ones in consumer-packaged goods categories. However, deceptive practices like greenwashing, risk eroding brand trust and loyalty, with studies showing declining customer satisfaction and potential sales loss. Genuine sustainability efforts, rooted in transparency and encompassing social and economic considerations, not only build brand authenticity but also foster lasting emotional connections with consumers.
Aug 14, 2023
With the growing awareness of environmental issues in recent years, consumers have become increasingly discerning about their choices, and their interest in sustainability has surged. More and more consumers are adopting sustainable lifestyles and paying close attention to how they shop and consume, while also holding businesses accountable for offering sustainable products in the market. Contrary to common beliefs that consumers are not genuinely purchasing sustainable products in-store, a study by Harvard Business Review based on actual consumer purchases found that of 90% of consumer-packaged goods categories, sustainability-marketed products grew faster than their conventional counterparts . This indicates a significant shift in consumer preferences towards sustainable options
Consumers therefore expect brands to play an active role in contributing to environmental change, moving sustainable action up the scale in the importance, and consequently the core values of most businesses. Consumers are more aware of how companies operate behind closed doors in terms of sustainability practices, making this transparency a key factor in their purchase decisions. A global survey by TANDBERG and Ipsos MORI further validated the importance of corporate environmental responsibility, brand equity, and competitive advantage, as more than 50% (1 billion) of consumers stated their preference for goods from environmentally responsible companies .
However, some companies resort to deceptive practices known as "greenwashing" to create a false image of environmental responsibility, as sustainable marketing is seen as advantageous. For instance in a 2022 investigation by Quartz alleged that H&M, the world's second-largest apparel manufacturer and retailer, engaged in misleading business strategies by inaccurately reporting the environmental impact of their clothing through the Higg Index . Accusations of lack of transparency has the potential to raise doubts about the credibility of sustainability claims, leading to mounting scepticism and regulatory scrutiny of the fast-fashion industry's environmental, as well as social practices. H&M's marketing strategy, which aimed to capitalise on the growing segment of eco-conscious consumers, was scrutinised as allegedly deceptive and misleading. The use of positive language and imagery, such as green hangtags and "Conscious Choice" labelling, had potential to further fuel the perception of greenwashing, giving consumers the impression that the clothing potentially had a more positive environmental impact than it may have done.
This is an example of how not sowing realistic sustainable efforts into a brand strategy in a way that suits your values and capabilities can negatively impact a brand image. Making false promises on sustainability can be worse than not being sustainable at all. Greenwashing not only undermines genuine efforts towards sustainability but also has severe consequences for brand reputation and consumer engagement. Another study by Harvard Business Review (2022) on 202 publicly traded large U.S. firms found that when the number of stated green product innovation (GPI) goals outweighed the actual actions taken by these companies, customer satisfaction declined . As consumer satisfaction drops, brands can expect to lose customers and sales, as demonstrated in a survey by Shift Insight (2020) with 1,002 UK consumers, where 62% of respondents indicated they would minimise or cease purchases from companies engaged in greenwashing practices . While greenwashing may provide short-term benefits in attracting customers and improving sales, the long-term consequences could be devastating. Misrepresenting green products and making false environmental claims may erode consumer trust in the brand, and once trust is broken, it becomes challenging to rebuild. Moreover, consumer engagement and brand loyalty suffer, leading consumers to switch to other more trustworthy competitors.
So how can a brand implement this vital ‘trend’ into their operations and avoid wrongful claims? To start with, it is important to view sustainable branding as an integration of environmental, as well as social and economic considerations, not just the former. Making sure that all parts of the supply chain are treated with fairness and respect, as well as balancing the economic growth of the company with that of the countries and communities within which it operates and affects are just as critical as the use of recycled packaging for example. Then, when it comes to relaying this improved strategy, transparency is a friend not foe. When companies are transparent and honest in their sustainability efforts, it effectively communicates their genuine commitment to sustainable practices to all stakeholders, fostering brand authenticity and admiration across the industry, alongside creating value for the company’s newfound consciousness. This is the case for Amazon, who according to a report by Brand Finance (2023) holds the highest sustainability perception value among all brands, amounting to US$19.9 billion, with consumers seeming confident in the company’s commitment to minimising its impact, sustaining their loyalty . It is not just economic gain that can come from improved commitments to people and planet, as the combination of functional and emotional positioning in the eyes of those involved in the brand can lead to a significant shift in brand perception and foster genuine emotional connections. In a world where connections are more and more imperative to brand success, the adoption of more responsible values translated into actions are now a need to the daily function of a business, as well as long term plan to allow for any sort of competitive advantage to be achieved.
Embracing sustainable responsibility into brand operations can allow for benefits of the economic as well as emotional type. The lasting positive impact of a new strategy that permits accurate and achievable results can lead to a lasting business, in terms of brand reputation and loyal brand advocates as consumers and competitors become more attune to the growing emphasis of sustainability on purchasing decisions. This change however has to start from within and be for genuine reasons to contribute to the common good, with the advantages of an environmentally, socially and economically conscious image being a positive side effect to a conscientious sustainable policy that is embedded into the heart of the brand.