What is greenwashing? Meaning of climate change term, examples including DWS Deutsche Bank, Shell, Innocent

The post-Covid period has arguably been a bad time for climate change and the environment.

Despite a positive COP26 in Glasgow in late 2021, CO2 emissions have risen while fossil fuel usage has soared as countries have rebooted their economies in the wake of the pandemic.

The Russia-Ukraine war has also fuelled an energy crisis that appears to be leading governments to focus more on natural gas and coal than green energy.

In the UK, despite bowing to opposition pressure to introduce a windfall tax on energy firms, Boris Johnson’s government has rejected calls to fund better insulation for homes, flirted with fracking, and has also pledged to licence more North Sea oil and gas exploration.

The Prime Minister has frequently said the UK is pursuing “clean” energy - a claim green campaigners have labelled as greenwashing; a term that is also frequently levelled at businesses.

In a speech on Monday (4 July) Environment Agency chair Emma Howard Boyd is expected to warn firms are creating risk for their investors through “deception” about their green credentials - something which could cost them money.

So what does greenwashing mean - and are there any real world examples of the practice?

Here’s what you need to know.

What is greenwashing?

Greenwashing is a term used to describe when a country, company or product gives misleading information about its green credentials in a bid to win votes, improve its reputation, or boost sales among voters or consumers.

The term is a variation of the term ‘whitewashing’, which is defined as a deliberate attempt to gloss over or hide bad information about something.

Another similar term to have come out of whitewashing is ‘sportswashing’, which is the use of sport to improve the reputation of a government or firm - an accusation that’s been levelled at Saudi Arabia for its new golf tournament and its ownership of Newcastle United.

Recent YouGov research has suggested greenwashing can be lucrative for businesses, with more than half of European consumers agreeing that it’s worth paying more for sustainable or environmentally friendly goods.

However, the same research also found some shoppers are cottoning on to the practice, with just 34% of European shoppers trusting companies when they say they’re committed to tackling climate change.

According to comments reported by PA, Environment Agency chair Emma Howard Boyd is set to warn greenwashing is compromising the world’s chances of effectively tackling the impacts of climate change.

In a speech to the UK Centre for Greening Finance and Investment Annual Forum, she is expected to say: “The more businesses are transparent about their plans to transition to net zero and prepare for climate shocks, the easier it is to benchmark best practice, set standards and celebrate the companies that really are delivering on their commitments.

“As with the government’s ambition for net zero by 2050, delivering on climate resilience and nature recovery requires robust, consistent and trusted data.

“If we fail to identify and address greenwashing, we allow ourselves false confidence that we are already addressing the causes and treating the symptoms of the climate crisis.”

She is also set to warn firms and investors that greenwashing will carry a financial cost, with the danger being that people “won’t realise this deception until it is too late”.

It comes after a report from the Climate Change Committee warned the government is failing to deliver the policies needed for the UK to reach its net-zero targets.

What are recent examples of greenwashing?

Several major companies have had greenwashing allegations levelled at them.

Here are some recent high profile examples:

DSW - Deutsche Bank

Global financial and banking corporation Deutsche Bank’s asset management arm DSW was raided by the German authorities in June 2022 over allegations that it has misled investors about the environmental credentials of some of its financial products.

The company has frequently paraded green commitments to investors, such as talking up its use of artificial intelligence to identify companies with climate risks.

But prosecutors said their initial investigations showed there was "sufficient factual evidence" that environmental, social, and governance criteria were not considered in a majority of the funds featured in the company’s sales brochures.

Hours after the raid, DWS’s CEO Asoka Woehrmann announced his resignation.

Deutsche Bank is now undertaking its own investigation into the saga.

DWS has repeatedly denied it misled investors, and both DWS and Deutsche have said they are cooperating with regulators and authorities.

Shell

Oil and gas firms like ExxonMobil and BP have become a major target for green campaigners as a result of their legacy fossil fuel operations.

But the progress these corporations claim to be making away from oil and gas, as well as the profits they continue to make from them, have also come under major scrutiny of late.

For example, comedian Joe Lycett staged a publicity stunt outside Shell’s London HQ in October 2021 because the fuel and energy giant “seem[s] to do a lot of greenwashing”.

“I’d like to chip away at climate change and get them to change their policy. But realistically, they seem to bury their heads in the sand around this thing,” he said.

Mr Lycett added that while Shell was doing “brilliant things” by investing in renewables, the “fraction” of renewables to fossil fuels the company was handling was unacceptable and his aim was for Shell to “stop taking oil out of the ground”.

In response, a Shell spokesperson said: “As Joe points out, we are already investing billions of dollars in lower-carbon energy. We need to grow these new businesses rapidly if we are to alter the mix of energy we sell.

“That means letting our customers know – whether through advertising or social media – what lower-carbon solutions we offer now or are developing, so they can switch when the time is right for them.

“But the world still needs oil and gas for years to come – and investment in them will ensure we can supply the energy people can rely on, while lower-carbon alternatives are scaled up.”

Innocent

In February 2022, Innocent - a drinks brand owned by global giant Coca-Cola - had an advert banned by the Advertising Standards Authority (ASA) because it “misled” viewers about its environmental impact.

Environmental campaigners had complained the advert implied that drinking smoothies from a disposable plastic bottle was good for the environment - a claim that was upheld by the ASA.

Innocent said its marketing push did not suggest that buying the products themselves would lead to a positive environmental impact, but was a statement about its wider environmental goals.

As a result of ASA censure, the brand can no longer use the advert in question.