[False Economy] Is Everything Eco-Friendly Just Because It Has a Green Mark?… Greenwashing Warning

Global Companies like Coca-Cola, Apple, and H&M
Face Disgrace Despite Various ESG Social Contribution Efforts

Editor's NoteMany people thought it was a smart economic activity that could yield better results, but it often turned out to be a misstep. When consumers are deceived by corporate marketing or blinded by momentary gains leading to poor decisions, the ones who ultimately suffer are the consumers. This article aims to examine economic activities where misjudgments in everyday life lead to failures, or 'missteps.'

‘Eco-friendliness’ has emerged as one of the essential marketing strategies for companies. They advertise and promote products with green labels as eco-friendly and organic, but upon closer inspection, many of these claims are false, exaggerated, or distorted, requiring caution. Such acts by companies of attaching green labels to deceive consumers into thinking their products are eco-friendly are called ‘greenwashing,’ ‘environmental disguise,’ or ‘eco-friendly camouflage.’

Source=Asia Economy DB

The term greenwashing was first introduced in the 1980s by environmental activist Jay Westervelt, who criticized companies for fake eco-friendly promotions. According to the seven types of greenwashing revealed last year by Canadian eco-consulting firm TerraChoice, they include ▲ hiding trade-offs ▲ insufficient evidence ▲ vague claims ▲ irrelevant claims ▲ justifying harmful products ▲ lies ▲ inappropriate certification labels.

A common example of greenwashing around us is Coca-Cola’s plastic bottles. Cola bottles are among the most frequently found marine debris. Coca-Cola produces 120 billion plastic bottles annually.

Coca-Cola is attempting to revamp its image through various eco-friendly social contribution efforts under ESG (Environmental, Social, and Governance) management. It also announced plans to make 100% of its packaging recyclable by 2025. However, the results are minimal. The UK Guardian reported, “Research shows that since 2000, Coca-Cola’s plastic production has doubled, but the plastic recycling rate is only 9%.” Coca-Cola was also dishonored as the world’s worst plastic brand for four consecutive years from 2018 to 2021.

Plastic recycling waste piled up at the Recycling Center in Yongin-si, Gyeonggi-do.
[Image source=Yonhap News]

Apple is another global company criticized for greenwashing. Although it claims to be an eco-friendly company, it has been pointed out that its marketing strategy encourages consumers to frequently replace products by making device repairs difficult.

Since the iPhone 12 series launched in 2020, Apple has stopped providing charging adapters and wired earphones. They claim this reduces waste and decreases the weight and volume of product packaging, thereby lowering carbon emissions. However, critics argue that the cost savings in manufacturing and transportation benefit Apple, while the expenses are entirely passed on to consumers purchasing the products.

Global clothing brand H&M faced difficulties due to greenwashing controversies. In 2022, H&M was sued by consumers in New York and Missouri over its eco-friendly clothing line ‘Conscious.’ Consumers claimed that H&M falsely advertised about 100 women’s clothing items as having high sustainability ratings (New York) and exaggerated the environmental benefits of polyester fibers made from recycled plastic bottles (Missouri).

Environmental organizations believe that as greenwashing becomes increasingly sophisticated, regulations are needed to prevent companies from misleading consumers into mistakenly believing products are eco-friendly. Professor Song Yoo-jin of the Department of Consumer Studies at Chungbuk National University warned, “Even if consumers have the will to practice environmental protection, cleverly designed products that make it difficult to distinguish whether they truly contribute to eco-friendly activities can ironically lead to complicity in environmental destruction.”

For example, recently, Canada’s Lululemon was reported by environmental groups and is under official investigation by the Canadian Competition Bureau. Environmental groups claim that although Lululemon has emphasized that ‘our products and actions reduce environmental harm and contribute to restoring the planet,’ the materials used are derived from fossil fuels, and greenhouse gas emissions have increased. If Lululemon is found guilty of greenwashing, it could face fines of up to 3% of global profits, amounting to as much as $400 million.

The Psychology of Spending More on Eco-Friendly Products Despite Higher Prices

On April 22, Earth Day, representatives from Consumer Climate Action wore clothes made of plastic and recyclables at Baekbeom Square in Namsan Park, Jung-gu, Seoul, urging a ban on plastic use. Photo by Jinhyung Kang aymsdream@

Even if prices are somewhat higher, consumers tend to spend more on companies that consider the environment. According to a product selection survey released last year by the Korea Consumer Agency, 82% of 1,000 domestic consumers expressed willingness to purchase eco-friendly products. Among them, 93% said they would buy eco-friendly products even if they were more expensive. As public awareness of the environment rises, sales of eco-friendly products in domestic supermarkets increased by 15% compared to the previous year, illustrating this trend.

Korea also has regulations against greenwashing. Article 15 of the Ministry of Environment’s ‘Notice on the Management System for Environmental Labeling and Advertising’ states that advertising a product as containing recycled materials without explicitly specifying the amount or proportion, thereby making it appear that the entire product corresponds to the advertisement, can be classified as ‘unfair labeling and advertising.’ However, while product advertisements have relatively clear sanction standards, greenwashing found especially in corporate image advertisements has ambiguous criteria, making it easier to evade penalties.

Experts believe the most important factor is a change in corporate awareness. Professor Lee Eun-hee of Inha University’s Department of Consumer Studies analyzed, “With the recent emphasis on value consumption, eco-friendliness and environmental protection are among the most desirable values consumers hold. If companies take the lead in supporting these efforts, the ripple effect will spread throughout society, and the companies themselves will gain an image as ‘good’ and ‘virtuous’ companies, achieving two goals at once.”