Our content analysis resulted in the identification of three different themes highly debated in the literature: The meaning of greenwashing, its main consequences, and the recent conceptualization of CSR as a form of regulation to prevent greenwashing practices.
The meaning of greenwashing
Following Lyon and Montgomery (2015), more research is needed to acknowledge the variety of forms and mechanisms related to greenwashing to better understand its meaning. We therefore revise the different definitions presented in literature to identify its main characteristics and the underlying mechanisms of the phenomena.
As claimed by Seele and Gatti (2017), although the literature on greenwashing is expanding, there is not a universally accepted definition of the term, and the concept itself is ambiguously defined. For example, although the majority of scholars consider greenwashing as exclusively dealing with environmental issues (61.6% of the selected articles), other researchers maintain that greenwashing is also related to social issues (38.0% of articles).
Another distinction among greenwashing definitions provided in the academic literature relates to the degree of falsehood implied in the message. Some academics consider greenwashing as false advertising or misleading claims (e.g. Lane, 2010, 2013; Mills, 2009). According to a second group of scholars, greenwashing also includes claims that are neither substantiated by a credible third-party certification nor by evidence (e.g. Alves, 2009; Bazillier & Vauday, 2013). Other researchers note that greenwashing is not typically false communication but rather it is the selective disclosure of positive information about a company’s environmental or social issues without full disclosure of negative information on these aspects (e.g. Kim & Lyon, 2011; Lyon & Maxwell, 2006, 2011; Marquis & Toffel, 2011; Mitchell & Ramey, 2011). According to this view, greenwashing is understood as the obscuration of potentially harmful information by an organization (Mitchell & Ramey, 2011). Therefore, following the selective view, greenwashing is not the same as having a poor record on environmental performance because “a firm can have a poor record without presenting any positive information about itself, or can have a relatively good record while simultaneously promoting its positive actions publicly and failing to discuss its (few) negative environmental impacts” (Lyon & Maxwell, 2006, p.3).
Linder (2010) distinguishes between two major categories of greenwashing definitions: 1) definitions focused on the attributes of the objects, and 2) definitions focused on the process behind the object. In the object attribute view, what is taken into account is the consistency between the attributes of an object and the corporate claims regarding the greenness of the object (Linder, 2010). Therefore, the focus is on the specific object of communication and its characteristics. According to this view greenwashing can be considered “false advertising” (Mills, 2009), “ads and labels that promise more environmental benefit than they deliver” (Dahl, 2010), “unsubstantiated or misleading claims about the environmental or social benefits of a product” (Bazillier & Vauday, 2013). The process attribute view focuses on the communication process. In particular, it takes into account the corporate inputs or efforts that have gone into communicating the greenness of a product, in relation to the efforts to improve the product’s actual green credentials. Examples of process attribute view definitions are the Greenpeace definition (Greenwashing as “the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service”), which is one of the most cited in literature, or the Marquis and Toffel’s definition: “Greenwashing is the practice of promoting environmentally friendly programs to deflect attention from an organization’s environmentally unfriendly or less savory activities” (Marquis & Toffel, 2011, p.19). In relation to the process attribute view, Mitchell and Ramey (2011) specify that to be considered greenwashing, the “act” has to be deliberate, implying the intentionality of the deception (Nyilasy, Gangadharbatla, & Paladino, 2012).
Seele and Gatti (2017) recognize another fundamental aspect of greenwashing: it is a phenomenon in the eye of the beholder. According to the authors, regardless of the level of falsehood of corporate CSR communication, greenwashing only exists when a message is highlighted as such by NGOs, the media, or other stakeholders. Therefore, the accusation from a third party is an essential aspect of greenwashing.
Consequences of greenwashing
Our qualitative analysis of greenwashing literature has provided a summary of the main consequences of greenwashing, especially for consumers and companies. Tables 4 A and 4B in the previous chapter provide a structured and comprehensive summary of greenwashing consequences discussed in literature, expanding the analysis of Lyon and Montgomery’s article (2015) in light of new studies and research in the field. In the tables, greenwashing consequences are divided into three main groups: A) consumers, B) companies, C) other stakeholders, the environment, and the society at large. The first category presents the effects of greenwashing related to consumers’ attitudes, behaviors, and intentions. In the second group, we report internal consequences for companies engaged in greenwashing. Group three includes the more general effects of greenwashing in terms of environmental and social aspects or related to other stakeholders such as employees or stockholders.
Below we briefly discuss the main consequences identify by our analysis and reported in the tables:
First of all, the research literature agrees that the practice of greenwashing is associated with several negative effects on consumers’ attitudes, behaviors, and intentions (Table 4 A). although evoking nature may mislead consumers in their evaluation of corporate image, especially if they are not experts on CSR related issues (Parguel, Benoît-Moreau, & Larceneux, 2011), the wide range of greenwashing cases is causing consumers to become increasingly skeptical of corporate CSR claims (Aji & Sutikno, 2015; Rahman, Park, & Geng-qing Chi, 2015). As a consequence, superficial and sporadic CSR communication may have a negative influence on consumers’ purchase intentions, regardless of the level of corporate involvement in greenwashing practices (Rahman et al., 2015). This widespread skepticism, probably means that consumers perceive less greenwashing when a company communicates an economic motive than when it communicates an environmental or social motive for an investment (de Vries, Terwel, Ellemers, & Daamen, 2015), surprising as this may be.
In addition, greenwashing increases consumers’ confusion about corporate CSR (Furlow, 2010) and it seems to have a negative effect on consumers’ brand evaluation (Parguel et al., 2011), consumers’ opinion about corporate environmental sustainability (Mason & Mason, 2012), consumer green trust (Chen & Chang, 2013), consumer word of mouth (Chen, Lin, & Chang, 2014), and also on consumers’ brand attitudes (Nyilasy et al., 2012; Nyilasy, Gangadharbatla, & Paladino, 2014).
Greenwashing also seems to negatively affect the firm’s financial performance (Table 4 B). Indeed, although it may sometimes be used to successfully deflect attention away from negative CSR behavior (Du et al., 2016), it often seems to harm firms financially (Du, 2015; Walker & Wan, 2012), especially in the current context characterized by a high scrutiny from civil society and growing stakeholder skepticism. In particular, it negatively affects corporate legitimacy and reputation, even when corporate communication is not misleading, and the greenwashing accusation is false (Seele & Gatti, 2017). Indeed, corporate CSR communications may backfire on the company if the public feels that the company is engaging in self-promotion (Lyon & Montgomery, 2013). As a consequence, companies are now less motivated to become less environmentally harmful because it does not pay off. Therefore, following Furlow (2010), greenwashing will ultimately hurt not only consumers and companies, but also the environment.
CSR regulations to prevent greenwashing practices
Greenwashing literature recognizes the importance of NGOs and activist groups in detecting greenwashing (Bazillier & Vauday, 2013; Lyon & Maxwell, 2011; Seele & Gatti, 2017) but it also suggests that some firms may disclose less about their CSR because of the fear of being accused of greenwashing (Lyon & Maxwell, 2011). Nevertheless, scholars agree that the first condition to decrease greenwashing is through the refinement and development of a CSR regulatory system. The interesting point here is that they do not seem to embrace the mainstream view discussed in CSR literature claiming the predominance of the voluntary nature of CSR. Indeed, according to greenwashing scholars, defining and treating CSR essentially as a voluntary practice facilitates the diffusion of greenwashing. As Alves (2009) claims, “the volunteer-led CSR paradigm of the last decades has both coddled and promoted the proliferation of green spin and greenwashing.” With the exception of Mahoney, Thorne, Cecil, and LaGore (2013), who suggest that voluntary CSR reports are generally a sign of high-quality CSR and not greenwashing, all the other articles we analyzed look at the voluntary dimension of CSR, supported by the majority of CSR definitions (Dahlsrud, 2008), as one of the main antecedents favoring the diffusion of greenwashing.
In addition, as summarized in Table 5, greenwashing scholars argue that “a reduction of greenwashing activities requires at least industry-wide codes of practices and, at best, regulation” (Smith & Font, 2014). Greenwashing literature is indeed consistent in stressing the necessity of involving regulators and policy makers for developing CSR standards and legislation. The range of scholarly suggestions covers pleas for self-regulation bodies (Kirchhoff, 2000) or independent auditing or rating (Huang & Chen, 2015; Parguel et al., 2011) and general demands for standards and regulations (Polonsky, Grau, & Garma, 2010) as well as a clear call for “federal regulations” (Feinstein, 2013) as the strongest form of third-party involvement. According to greenwashing scholars, this would substantially decrease greenwashing practices and would ultimately lead to a more trustworthy form of CSR.
As noted above, the perspective adopted by scholars seems not to be in line with the traditional mainstream approach of CSR research. In CSR literature, the principle of voluntarism is predominant and implies that responsible business activities are discretionary and reach beyond the rule of law. Conceptually, this principle implies that governments have a minimal role, if any, in the CSR debate (Dentchev, Balen, & Haezenck, 2015). However, the exclusion of mandatory aspects in the definition of CSR has recently been challenged by a number of scholars (Waagstein, 2011). Moreover, a growing number of governments are enacting CSR laws and regulations (e.g. Indonesia – 2007, Denmark – 2008, France – 2010, Philippines and Spain – 2011, Argentina and Brazil – 2012, India and Norway – 2013, European Union 2014), thus creating a debate as to whether the nature of CSR is exclusively voluntary or may include a mandatory dimension. Even the European Union has changed its well-known definition of CSR (“concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” Commission of the European Communities, 2001) to include a mandatory dimension, introducing the importance of policy measures and regulations to prevent unfair CSR and greenwashing behaviours.
In this debate, greenwashing scholars reflect recent perspectives on the inclusion of mandatory aspects in the CSR definition and practice (Cominetti & Seele, 2016; Gatti, Vishwanath, Seele, & Cottier, 2018; Sheehy, 2015; Waagstein, 2011; Wagner & Seele, 2017). Indeed, they strongly support the necessary development of mandatory elements for the establishment of a “better”, more credible CSR. In this respect, they provide a considerable contribution to the general discussion about voluntary versus mandatory CSR by explicitly addressing the consequences of a totally voluntary approach in terms of greenwashing, and, above all, by proposing and discussing specific regulatory solutions to reduce such practices.
Kirchhoff (2000), for example, tests a model for preventing greenwashing based on the introduction of a fine into the environmental labeling system. To work effectively, the model requires a third-party independent labeling authority, whose presence seems to decrease greenwashing and favor compliance to CSR standards. The introduction of an external authority to monitor CSR is also supported by Laufer (2003), who introduces the concept of tripartism, i.e. the integration of a third party into the regulatory arena, as a solution against greenwashing.
In relation to environment labeling or eco-marks, Lane (2010) offers an in-depth analysis of enforcement techniques to prevent greenwashing in eco-mark systems. Indeed, though eco-marks’ core purpose is to protect and inform consumers about the products’ green credentials, sometimes they are used by companies to mislead consumers about the environmental characteristics of a product. Following Lane (2010), public anti-greenwashing enforcement achieves better results than private eco-mark enforcement or consumers’ actions. In particular, government agency investigations and certification mark enforcement litigation seem to be the most successful mechanisms against the improper use of eco-marks.
Also claim that civil actions by consumers and investors are not enough to prevent greenwashing and that CSR related communication should be more strongly policed. Remedies under false advertising laws and under securities fraud laws should be investigated and further developed (Cherry and Sneirson, 2011).
In general, greenwashing scholars seem to agree that an independent environmental audit system and additional public regulation may prevent companies with poor environmental performance to engage in greenwashing (Huang & Chen, 2015).
Combing the voluntary and mandatory dimensions to promote CSR
Summing up the contribution of greenwashing literature to the ongoing debate about voluntary versus mandatory CSR, we can see strong support for the inclusion of mandatory aspects in the regulations of CSR.
Voluntary CSR is often considered in literature as a solution to corporate social and environmental externalities caused by globalized companies. The advent of globalization has complicated the regulation of corporate behaviors at the point that governmental regulations are no more capable of preventing several unsustainable behaviors. Not only voluntary CSR is discussed in literature as a solution to a deficit in regulation, but also it is often considered the most efficient way to address social problems. As claimed by Sheehy (2015), the voluntary dimension of CSR is motivated by the argument that “individual firms are better able to find ways to implement CSR and reduce their social costs more effectively when tailored by management to the specific industry or firm in which it is being applied” (p. 640). However, the voluntary approach is also criticized by CSR scholars for promoting free-riding behaviors and for the impossibility to sanction transgressions (O’Neill, 2007). Following Lock and Seele (2016), voluntary CSR may also question the transparency and credibility of CSR communication, given that companies are free to communicate what they want and how they want. A grey zone is thereby established that reinforces tendencies towards exaggeration and self-promotion, which might also include false information (Lyon & Montgomery, 2013; Seele & Gatti, 2017), and thereby enlarges the risk of reputational damage. A growing culture of self-promotion and falsehood (or the perception of such) increases the chances of the misinterpretation of CSR by consumers and other stakeholders and it increases consumer disorientation and skepticism (Furlow, 2010; Rahman et al., 2015).
It is important to note that also mandatory CSR per se may create grey zone areas where parties look for ways around the rules. For example, Wang et al. (2016) suggests that mandatory CSR may contribute to an unfair allocation of corporate CSR resources to personal projects and initiatives (with a limited social value). At an extreme case, it can “become a cover for graft and corruption by funding local political projects or organizations” (Wang et al. 2016, p. 540).
To reduce and prevent the diffusion of greenwashing, we therefore propose, in line with greenwashing research and institutional theorists (e.g. Sheehy, 2015; Waagstein, 2011), a paradigm shift integrating both the voluntary and mandatory dimensions of CSR.
As suggested by the European Commission, in the development of CSR “public authorities should play a supporting role through a smart mix of voluntary policy measures and, where necessary, complementary regulation” (European Commission (2011) 681). The introduction of reporting and communication standards and the establishment of independent environmental audit systems, as supported by greenwashing scholars, would therefore help to reduce the grey zone creates by the predominant totally voluntary approach. Finally, a reduction in greenwashing has the potential to increase trust in corporate green behavior and help to positively impact social welfare (Lyon & Montgomery, 2015).
The new paradigm is based on a new CSR definition integrating both voluntary and mandatory aspects. Indeed, Sheehy (2015) claims that CSR consists of “private international law norms seeking to ameliorate and mitigate the social harms of and to promote public good by industrial organisations” (p. 639). Following the institutional framework, CSR can be therefore defined “as a form of regulation” (Sheehy, 2015), regardless the fact that the “regulation” is a private, self-regulated initiative, or it is publicly imposed. This means that each specific social system (characterized by specific values, norms, and regulations) is responsible for shaping a specific form of CSR, characterized by a unique combination of voluntary and mandatory aspects. Thus, there is not a priori the perfect combination of voluntary and mandatory aspects, but each context designs a specific form of CSR. In India, for example, The Indian Companies Act 2013 legally requires firms to spend a percentage of their profits on CSR activities, while in US current CSR primarily consists of private business self-regulation (Gatti et al., 2018).
The new conceptualization of CSR “as a form of regulation” (Sheehy, 2015) proposed by institutional theorists and supported by greenwashing scholars as a way to prevent greenwashing, has a number of implications. First, it implies the transition from the idea of CSR as an internal management tool toward a broader understanding of the business and society relationship (Gatti et al., 2018). This shift in perspective has consequences at both a practical and theoretical level. Firms should be prepared to professionalize their CSR effort beyond mere impression management, or corporate communication practices. CSR activities should be increasingly treated as legal responsibilities, not just as marketing-related projects. Professionals in the field of law should therefore collaborate with experts in public relations and communication to ensure the transition of CSR as a form of regulation.
Also on the scholarly level the CSR transition toward regulation implies a shift in the competencies of CSR scholars. While for years CSR issues have been mainly related to business ethics, management and marketing studies, we expect now that the debate would be also addressed (more) in the field of law.
As previously claimed, the introduction of standards to regulate CSR does not mean the complete negation of a voluntary dimension. As discussed by Sheehy (2015), considering CSR as a form of regulation does not merely imply a collection of mandatory rules imposed by public authorities to regulate firms’ societal and environmental harms. Indeed, it also include self-regulation. As reported by Cominetti and Seele (2016), at the moment 88.2% of CSR standards consist of soft law initiatives, that is, self-regulated standards supported by the firms themselves, as for example the United Nations (UN) Global Compact. Firms can voluntarily adopt the UN Global Compact’s principles, with the sole obligation of communicating every year their progress about human rights and environmental issues.
