Greenwashing in 10 questions

As money laundering becomes increasingly difficult, the phenomenon of ‘greenwashing’ is gaining in popularity. What is it, who does it and why? Hildegard Deweerdt, KBC's in-house environmental expert, explains.

Greenwashing is simply pretending to be greener than you are. Giving the impression that your company, product or service is better for the environment than it actually is. The term ‘greenwashing’ always has a negative connotation.

With more and more consumers attaching importance to sustainability, companies like to label their product as organic, green or natural, hoping to generate more sales. And it works! According to research reports, products that are marketed as sustainable generate over five times more sales.

Greenwashing can be done through suggestion by using colours (such as green), words (such as organic) or packaging (such as flowered). Companies sometimes also claim that they have put a lot of effort into making their products more sustainable, but without providing specific information to back this up. Greenwashing can of course also happen through f ignorance. Companies sometimes genuinely want to make a positive change, for example by using recyclable packaging, but do not realise that other aspects of their operations have a greater negative impact on the environment.

Greenwashing can usually be determined objectively, but it requires some critical thinking, digging and knowledge. The more egregious it is, the easier it is to establish - think of Volkswagen with its 'cheat software'. It is less obvious when a product is promoted using vague language, for example referring to 'natural substances'. Of course, not all natural substances are either green or healthy; think of uranium or arsenic, for example. As it is not always easy for consumers to know what is truly ‘green’, we are helped by clear guides. An example is the Belgian federal government's Guide to Sustainable Procurement; it is an inspiring guide for public sector procurement.

On the one hand we are seeing greater consumer literacy and scepticism, and on the other more legal provisions around product standardisation and mandatory reporting. A company turning out CFC-free aerosols? All products must be CFC-free by law anyway, so mentioning this is irrelevant. Yet by doing so, the company is giving the impression that it is very concerned about your health.

To achieve the envisaged Green Deal, the European Commission has recently been regulating both the naming (taxonomy) of green financial products and their portfolio shares. Banks are also required to report on their corporate sustainability performance.

KBC has several credit investment products and, to a lesser extent, insurance products that are labelled as 'green', and is currently reviewing whether that label can still be used according to the taxonomy. KBC has developed a methodology to determine the CO2 emissions of its credit, insurance and investment portfolios.

As an example, banks might emphasise how small their own environmental footprint is, whilst keeping quiet about their investments in coal-fired power plants - which have a much bigger impact. By deliberately concealing certain issues, Deutsche Bank once earned the Greenwashing Award - an accolade that no company wants.

KBC pays great attention to transparent communication about its approach to sustainability, for example in the annual Sustainability Report and the Report to Society. We do get challenged. though; the NGO FairFin, for example, stretches KBC and other banks in their sustainability commitment and ranks them in their Bank Guide. And the climate activists Greenpeace and RX have staged demonstrations on our roof and outside the entrance to our building on Havenlaan. So far, however, we have fortunately not been accused of greenwashing. It is becoming more important to pay attention to this, however, as lawsuits are already being filed. Claims that a product or service is green or sustainable will have to be fully compliant with the EU taxonomy, which does set the bar very high.

KBC has been a net climate-neutral business in terms of its own footprint since the end of 2021. It’s basically a matter of continually reducing our footprint.

We do that through conscious choices and close monitoring in relation to energy and mobility. To help us achieve this, we have also set ambitious targets. We will offset the residual fraction of greenhouse gases which we cannot avoid by purchasing carbon credits from good-quality climate projects. So our policy is certainly not greenwashing, although the carbon-offsetting practice is not entirely uncontroversial. That’s why it is important to be transparent about it. I am in favour of offsetting, although robust initiatives to reduce emissions should always come first.

In my opinion, what individuals are doing is more akin to window-dressing. For example, someone conceals from their acquaintances that they went on a plane trip to Ibiza, but happily tells them that they are vegan. And they justify this to themselves by imagining that one behaviour compensates for the other. But hey ho, which of us is 100% consistent? The most important thing is that we need to tackle the environmental and health issues together. Everyone needs to be a bit of a do-gooder (laughs).

• Suggestive use of colour, language or images
• Providing irrelevant information
• Claims not backed up by facts
• Deliberate concealment
• Vague approach
• Flagrant cheating
  

Have you come across greenwashing? Then be sure to report it using the FPS Economy hotline, recommends our Economy Minister.