Greenwashing: An easy to use tool for measurement
Greenwashing: An easy to use tool for measurement Constructed of Existing Literature
Thimo Jowan Bosma s1866583
thimobosma@gmail.com University of Groningen
MSc BA Organizational & Management Control 2013-2014
Supervisor J.S. Gusc
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3 Thanks,
I would like to thank my supervisor, J.S. Gusc, for having me sharpened at the right times, and for the support that she has given me throughout the thesis process.
I would like to thank my family for the unconditional support and love that has contributed to
my graduation: Desiree Kuijpers, Menno Bosma, Joël Bosma, Ayla Bosma, Mark Bosma,
Bart Bosma, Marieke Hornstra-Moedt, uncles and aunts, cousins, nephews and nieces,
friends, fam. Hainje and fam. Schaafsma.
4 Table of Contents
Abstract ... 5
1. Introduction ... 5
2. Literature Review ... 8
2.1 Sustainability ... 8
2.2 Sustainability reporting/ environmental disclosure ... 9
2.3 Greenwashing ... 11
2.4 Measuring greenwashing ... 12
3. Methodology ... 19
3.1 Aim of the Study ... 19
3.2 Study Design ... 20
3.3 Type of Research ... 31
3.4 Sample size ... 31
4. Results ... 32
4.1 PUMA ... 32
4.2 NIKE ... 35
4.3 ADIDAS ... 37
4.4 BMW group ... 39
4.5 VOLKSWAGEN group ... 41
5.6 Barry Callebaut ... 45
5.7 Friesland Campina ... 47
5. Conclusion ... 49
5.1 Findings ... 49
5.2 Conclusion/ discussion ... 51
References ... 53
Appendices ... 57
Appendix A ... 57
Categorization ... 61
5 Abstract
Greenwashing is a current phenomenon in the sustainability field. However, a measuring tool is lacking. This study presents the creating of a tool, based on scientific and non-scientific literature. For example, TerraChoice (2010) has tried to make a checklist for greenwashing. The drawback of such a checklist, is that it does not provide one with greenwashing values. Furthermore, Walker & Wan (2012) have made an effort to measure greenwashing, but they oversee important aspects of greenwashing, such as the way disclosed information is defined. This study presents a user-friendly tool for any stakeholder to use and to check whether a firm is greenwashing.
1. Introduction
Recently, the consumers and investors of any kind of product are overwhelmed by green demand. Sustainability claims are made about products and services, in order to gain financially from that claim. The question raises, ‘is the product really “green” or are we being mislead by producers?’ What about firms, are they and their products as green as they claim they are? How do we know?
Recent attention on environmental sustainability puts pressure on firms as they have been accused of being one of the key causes of climate change and environmental problems (Korten, 1995). Therefore, over recent years, there has been a focus in corporate activity upon the concept of corporate social responsibility (CSR) and one of its central platforms, the notion of sustainability, and particularly sustainable development (Aras & Crowther, 2009).
Growing concern about the sustainability of the natural environment and raising consumer
and investor demand for green products (e.g. Tinne, 2013; Leonidou, Katsikeas & Morgan,
2012; TerraChoice, 2012; Furlow, 2009), are rapidly transforming the competitive landscape
and forcing companies to explore the costs and benefits of greening their marketing mix.
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According to Leonidou et al. (2012) firms that apply green marketing perform better –in terms of profitability- than those that are not applying green marketing, and the probability of higher profitability seems to be an incentive for companies to be sustainable.
As a result, significantly more firms are communicating green products, services and practices (TerraChoice, 2010; Furlow, 2009). However, more and more firms are engaging in greenwashing practices, which is the act of misleading consumers regarding the environmental practices of a company (firm-level greenwashing) or the environmental benefits of a product or service (product-level greenwashing) (Delmas & Burbano, 2011:6;
Tinne, 2013: 81). It is the intersection of two firm behaviors: poor environmental performance and positive communication about environmental performance (e.g. Delmas &
Burbano, 2011; Walker & Wan, 2012; Lyon & Maxwell, 2011) (as a way of companies to disclose environmental information (e.g. Neu, Warsame & Pedwell, 1998; Lyon & Maxwell, 2011; Lee & Hutchison, 2005; Clarkson, Li, Richardson & Vasvari, 2008; Patten, 2002; Al- Tuwaijri, Christensen & Hughes II, 2004; Wiseman, 1982)). Note that green marketing and greenwashing are not the same. One distinction is in defining green marketing as the marketing of products that are presumed to be environmentally safe, whereas greenwashing is the act of misleading consumers regarding the environmental practices of a product or service (Tinne, 2013: 81). Whereas green marketing is likely to lead to higher profitability (e.g.
Leonidou et al., 2012), greenwashing seems to have the opposite effect (Walker & Wan,
2012). Walker & Wan (2012) for example, investigating visibly polluting industries, state
that greenwashing –measured as the difference between substantive and symbolic action- has
a rather negative impact on financial performance, because (1) information on environmental
performance tend to be objective and widely available, making it relatively easy for
stakeholders to identify greenwashing; (2) firms are subject to higher stakeholder
expectations pertaining to the natural environment, and failure to meet these expectations
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results in significant financial losses; and (3) firms are subject to increased stakeholder scrutiny, making the identification of greenwashing more likely (Walker & Wan, 2012: 238).
Furthermore, Delmas & Burbano (2011) state that greenwashing can have profound negative effects on consumer confidence in green products, but the confidence of investors of environmentally friendly firms could also be harmed, ‘eroding the socially responsible investing capital market (Delmas & Burbano, 2011: 3). Besides, greenwashing includes reputation risks when consumers, non-government organizations (NGOs) or government entities question firms’ claims (Delmas & Burbano, 2011: 3; Lyon & Maxwell, 2011).
According to Lyon & Maxwell (2011) activists take a leading role in convincing the public of sustainable development practices to be greenwashing.
Although most agencies, corporations and academics agree upon the definition of greenwashing, there is little consensus of how to measure greenwashing and different methods have been applied by different authors and companies (e.g. Walker & Wan, 2012;
Lyon & Maxwell, 2011; Gallicano, 2011; Terrachoice, 2010). Walker & Wan (2012) for example, determine greenwashing by giving value to a firm’s substantive environmental action and to a firm’s symbolic action. Then they distract the latter from the former to determine the degree of greenwashing. Agencies such as the British Futerra (2010) introduced less operational measures, such as ‘Fluffy language’ or ‘Suggestive pictures’.
I find that there is no consensus of how to measure greenwashing and measures are
unclear and ambiguous. Besides, a weighted and accessible tool for doing so does not yet
exist. Therefore, my first aim of this study is to give a comprehensive review of existing
literature about greenwashing and the way it is measured. Then, to comply to the lack of a
weighted and accessible tool to measure, I will create such a tool based on the studied
literature. Eventually, I will perform an initial test upon the created tool, in order to provide
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insights in the functionality of the tool. In order to create a tool, it is necessary to first review the existing literature about measuring greenwashing.
The research questions are the following:
1. What are the prevailing ideas in the existing literature about measuring greenwashing?
2. How should these ideas be used to build a comprehensive tool to measure greenwashing?
3. To what extent is the tool indeed user-friendly and all-encompassing?
(initial testing)
The remainder of the article is structured as follows: the second part is the literature review about sustainability, environmental disclosure, and greenwashing. I will end the second section with a conclusion, which will lead me to the third section, methodology. The fourth section will be the ‘Results’ section, followed by (5) the discussion and the conclusion.
2. Literature Review
This section will exist of a review of sustainability, environmental disclosure, and greenwashing literature. Greenwashing would have no existence without the concept of sustainability. Therefore, prior to the literature review of greenwashing, I will first review literature about sustainability.
2.1 Sustainability
Today, it is rather inevitable for companies to have some sort of sustainability plan (e.g. Caprar & Neville, 2012). Sustainability comes in many forms and literature introduced a wide variety of definitions of sustainability (e.g. Caprar & Neville, 2012; Choi & Ng, 2011;
Sikdar, 2012; van Marrewijk, 2003). Caprar & Neville (2012: 231) state that ‘in essence,
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corporate sustainability means creating long-term value by adopting a business approach that is equally mindful of economic, social and environmental implications’. Choi & Ng (2011:
269) highlight the dimensions of the triple bottom line as they state ‘In encompassing all aspects of our world, sustainability has been framed by considering multiple dimensions (e.g.
environmental, economic and social domains, which are so called the triple bottom line)’.
Moreover, sustainability is about using today’s resources without compromising the needs of future generations, or as Aras & Crowther (2009: 280) put it: ‘Sustainability … implies that society must use no more of a resource than can be regenerated’. This can be defined in terms of the carrying capacity of the ecosystem (Hawken, 1993) and described with input-output models of resource consumption’. Van Marrewijk (2003) introduced a more nuanced definition of corporate sustainability and corporate social responsibility (CSR), which he uses interchangeably. He provides a broad definition, but argues that there is no one best definition of (corporate) sustainability. He points out that multiple levels of corporate sustainability exist in practice, depending on a firm’s sustainable ambition. His broad definition is
‘Corporate sustainability and, CSR refer to company activities –voluntary by definition- demonstrating the inclusion of social and environmental concerns in business operations and in interactions with stakeholders’ (van Marrewijk, 2003: 102).
2.2 Sustainability reporting/ environmental disclosure
Being sustainable is often not enough for a company to gain and maintain demand, as
the communication of environmental initiatives and its effectiveness are key to the level of
demand and financial gain, consequently (e.g. Wiseman, 1982; Clarkson et al., 2008; Patten,
2002). As sustainability has earned greater attention, so has reporting of sustainability, and
the way that firms disclose environmental information (Clarkson et al., 2008). For instance,
implicit and explicit standards to assess environmental disclosure have been introduced and
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discussed. According to Rawlins (2009), for example, firms have three obligations to be transparent. First, companies must present accurate, substantial, and useful information.
Second, companies must listen to stakeholders to discover the information they need. Third, companies must provide objective, balanced (i.e. financial and non-financial) information about their activities and policies. Furthermore, consumers, policy makers and journalists must be able to look beneath the green veneer and hold corporations accountable for the impacts their core business decisions and investments are having on our planet (Greenpeace).
However, guidelines in sustainability reporting seem to be poorly defined (Ballou, Casey, Grenier & Heitger, 2012), and this, in turn, may be due to the lack of legislation (Delmas &
Burbano, 2011). The diversity of stakeholder needs across industries and firms, and a multiplicity of sustainability measures, only make environmental disclosure more ambiguous (Ballou et al., 2012: 266). Despite the successful attempts of academics to find advances in sustainability reporting, many academics have been critical about the effectiveness (i.e.
validity of measures) of this reporting (Laufer, 2003; Ballou et al., 2012; Gray, 2010; Scerri
& James, 2010). Scerri & James (2010), for example, in their study focus on the methodological problems that might arise. ‘A key concern is that many indicators-centered projects present a relatively abstract view of things’ (Scerri & James, 2010). Gray (2010) argues that there is a lack of understanding of what sustainability really is, seeking for a more nuanced understanding of the term sustainability. Nevertheless, the fact that measuring and reporting on sustainability is bringing ambiguity along, possibly makes it easier for companies to greenwash, because customers are easier mislead (Chen & Chang, 2013).
Laufer (2003) explicitly points at the lack of verification by a credible third-party and the
subsequent potential danger of greenwashing occurrence. “There is a growing body of
literature of sustainable accounting that finds corporate posturing and deception in the
absence of external monitoring”, Laufer (2003) states.
11 2.3 Greenwashing
Greenwashing is the act of misleading consumers regarding the environmental practices of a company (firm-level greenwashing) or the environmental benefits of a product or service (product-level greenwashing) (Delmas & Burbano, 2011:6; Tinne, 2013: 81). Chen & Chang (2012) describe this phenomenon as green consumer confusion, following from incorrect or incomplete information about products or firms towards customers, and Laufer (2003) as environmental disinformation. Greenwashing is not adhering to promises or communications of environmental performance (Walker & Wan, 2012). In other words, it is the discrepancy between symbolic action and substantive action, in which symbolic actions are expressions of positive communication about environmental intend, also referred to as green talk, whereas substantive actions are defined as actual environmental initiatives or environmental performance, also referred to as green walk (Walker & Wan, 2010). Rodrigue, Magnan &
Cho (2012) empirically investigated whether environmental governance is substantive or symbolic. They state that ‘substantive practices would bring changes in organizations, most notably in terms of improved environmental performance, whereas symbolic practices would portray organizations as environmentally committed without making meaningful changes to their operations (Rodrigue et al., 2012: 1). Delmas & Burbano (2011: 4) describe greenwashing as the intersection of two firm behaviors: poor environmental performance and positive communication about environmental performance. Disinformation like greenwashing is used to repair or establish public reputation (Laufer, 2003; Beder, 1997). Furthermore, greenwashing is a form of unethical behavior as unethical behavior has been described as behavior that has a harmful effect on others and is either illegal or morally unacceptable in the larger community (Delmas & Burbano, 2011; Brass, Butterfield & Skaggs, 1998).
Table 1 summarizes the different definitions of greenwashing.
12 Author(s) Definition of Greenwashing
Tinne (2013) The act of misleading consumers regarding the environmental practices of a company, product or service.
Chen & Chang (2012) Green consumer confusion, following from incorrect or incomplete information about products or firms towards customers.
Laufer (2003) Environmental disinformation.
Walker & Wan (2012) The discrepancy between symbolic action and substantive action, in which symbolic actions are expressions of positive communication about environmental intend, also referred to as green talk, whereas substantive actions are defined as actual environmental initiatives or environmental performance, also referred to as green walk.
Delmas & Burbano (2011)
The intersection of two firm behaviors: poor environmental performance and positive communication about environmental performance.
Table 1 Recap of different definitions of greenwashing.
Most academics seem to agree about what contents greenwashing: it is the communication of good environmental (or sustainable) practices (products of about the firm), whereas this information does not match with actual practices. However, how is greenwashing measured? And, do academics and practitioners agree upon the measurement of greenwashing? What is the best way to measure greenwashing?
2.4 Measuring greenwashing
Although greenwashing may be seen as easily defined, identifying greenwashing
practices is still a challenge due to a lack of comprehensive measures. Therefore, this section
is devoted to a review of attempts to measure or spot greenwashing. However, because
scientific literature on measuring greenwashing is limited, and companies such as BSR
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(2009) have come up with attempts to measure greenwashing, different kinds of sources have been subjected to the review. Next to scientific literature, websites and external reports of several companies have been used to get a broad picture of initiatives for setting up a greenwashing measurement framework.
2.4.1 Scientific literature
Quantitative | The Harm of Symbolic Actions and Greenwashing (Walker &
Wan, 2012)
Walker & Wan (2012), in their quantitative study, test the relationship between greenwashing and financial performance by coding corporate websites in order to distinguish substantive actions from symbolic actions. As said, symbolic actions are expressions of positive communication about environmental intend, also referred to as green talk, whereas substantive actions are defined as actual environmental initiatives or environmental performance, also referred to as green walk (Walker & Wan, 2012). To measure greenwashing they first determined the extent of substantive action from the information a firm disclosed on its website.
They finally came up with the following categories to measure symbolic and substantive actions: managing greenhouse gas emissions, product innovation, lifecycle analysis, environmental management systems, technological development, recycling, recovery projects, stakeholder engagement, employee training, conservation and restoration, waste management, and independent reviews/ audits. They found that most environmental communication was about environmental conservation (Walker & Wan, 2012: 235).
Moreover, they found that symbolic action and greenwashing have a negative effect on
financial performance (Walker & Wan, 2012).
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Qualitative | A Critical Analysis of Greenwashing Claims (Gallicano, 2011) Gallicano (2011) uses a (one-)case study about Starbucks Corporation to analyse and measure greenwashing claims. To do so, she investigates forums and greenwashing websites, which contain reactions on environmental communication efforts published on Starbucks’
website and disclosed videos, in which these greenwashing claims about Starbucks are made.
Furthermore, she argues that the paper presents the first comprehensive framework for evaluating whether companies are engaging in greenwashing (Gallicano, 2011). “This framework is based on synthesizing the frameworks of Committee of Advertising Practice, Greenpeace, EnviroMedia and the University of Oregon and TerraChoice”, she states. Her framework consists of 7 categories, from which 12 signs of greenwashing could be detracted.
Author Sign of Greenwashing #
1Gallicano (2011) The business is inherently dirty but touts environmental initiatives A1 The company promotes environmental efforts, which could divert
attention from its bigger environmental problems
A2 The company claims a product is green based on a few attributes
without considering the full life cycle
A3 A product may be green, but distracts from the environmental impact
of the product category
A4 Environmental claims are made that cannot be proven by data or third party verification
A5 Environmental claims are overstated or exaggerated A6 Claims are poorly defined (and misunderstood by consumers) A7
Claims contain pseudo-scientific verbiage A8
The company is claiming a product or activity is green even though there are laws either restricting or mandating such
A9
The company is making false claims A10
The company is giving the impression of third party labels, where non
exist A11
The company is failing to acknowledge that an informal debate exists A12 Table 2 Signs of greenwashing adopted from (Gallicano, 2011).
In her framework Gallicano (2011) compares environmental criticisms of the public to what she actually thinks about the communication effort, using her greenwashing framework, to determine the fairness of the public environmental criticisms. However, Gallicano does not provide (quantified) value to greenwashing, but she rather explains, in the results section, the
1 Numbering in order to catagorize more convenient later on
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differences between the public’s comments and greenwashing from her point of view, which makes her framework not-generalizable for other firms.
2.4.2 Non-scientific literature
TerraChoice (2010) | Consultancy
TerraChoice is a company that is now acquired by UL (Underwriters Laboratories), a not for profit safety science company. TerraChoice was an environmental consultancy firm before it got merged and became well-known by their seven sins of greenwashing.
TerraChoice (2010) introduced the seven sins of greenwashing to make consumers aware of the sometimes ambiguous greenwashing practices. The seven sins of greenwashing according to TerraChoice are outlined in the following table.
Author Sin #
TerraChoice (2010)
Sin of the hidden trade-off: suggesting a product is ‘green’ based on a narrow set of attributes
B1
Sin of no proof B2
Sin of vagueness: poorly defined claims that are likely to be misunderstood
B3 Sin of irrelevance: making an environmental claim that may be
truthful but unhelpful for consumers seeking environmentally preferable products
B4
Sin of the lesser of two evils: distracting the consumer from the greater environmental impact, by claiming something that is only true within some product category
B5
Sin of Fibbing: environmental claims that are simply false B6 Sin of worshiping false labels: giving the impression of third-party
endorsement: fake labels
B7 Table 3 TerraChoice’s seven sins of Greenwashing.
BSR (2009) and Futerra | Consultancy
In 2009 BSR (Business for Social Responsibility) and Futerra used TerraChoice’s seven sins
of greenwashing to come up with what they think are the most important signs of
greenwashing. BSR is a company that develops sustainable business strategies and solutions
through consulting, research, and cross-sector collaboration (BSR, 2009). Futerra describes
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itself as a unique expert in corporate responsibility and communicating sustainability. They came up with ten signs of greenwashing (BSR, 2009: 7).
Author Sign of Greenwashing #
Futerra/ BSR (2009)
Fluffy language like eco-friendly C1
Green product vs. dirty company: green products made in a polluting firm
C2 Suggestive pictures: green images that imply an unjustified green
impact
C3 Irrelevant claims: emphasizing a small green part from the brown
majority
C4 Best in class: best in the industry but in a dirty industry C5 Just not credible: irrelevant tags (e.g. green for dangerous tags C6
Jargon C7
Imaginary friends: false labeling C8
No proof: no evidence C9
Out-right lying: totally fabricated claims or data C10 Table 4 The 10 signs of greenwashing adopted from BSR and Futerra (BSR, 2009).
BSR and Futerra go a step further by introducing a ‘Greenwashing checklist’ with 14 questions divided among 4 categories (BSR, 2009). The checklist is meant to provide guidance ‘as to where you are on impact, alignment and communication. It can be an easy way to call out potential risks’. The 14 questions are outlined in table 6.
Author Question Category #
BSR (2009) Is the topic of your message a significant environmental achievement? If you reach to the conclusion that the initiative is not a significant change, don’t communicate about it.
Impact E1
Is the issue you’re addressing material to your business?
E2 Have you invested significant resources (time,
funds and people)?
E3 Did you spend more money on the activity than on
the communication? If you spent more money on communication, it is likely that this initiative was driven by reputation
E4
Have you already achieved the results in your
claim? E5
Have you worked with multiple functions within your company?
Alignment E6
Are other activities in your company consistent with this message? Other products and processes.
E7 Have you engaged stakeholders and incorporated
their feedback? Stakeholders will be able to provide you with usable feedback.
E8
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Could your claim be supported by a credible third- party?
E9 Is it easy for people to understand your claim and
its significance? Communication E10
Do people consider your company trustworthy? If not, be careful. Good initiatives could lead to unjustified greenwashing claims.
E11
Do you have data to back up your claim? E12
Are you conveying your understanding of the big picture?
E13 Is the message honest and not self-glorifying?
Bragging is a turnoff in any situation.
E14 Table 5 Greenwashing checklist (BSR, 2009).
Using the checklist managers can determine if they are greenwashing with their companies. Every question contains some advice to managers. The greenwashing checklist is based on the 10 signs of greenwashing (BSR, 2009), and might therefore be a good spotting tool for greenwashing. However, it will not be able to generate a value of greenwashing.
Greenpeace | NGO | Activists
According to its website Greenpeace is an independent global campaigning organization that acts to change attitudes and behavior, to protect and serve the environment and to promote peace (Greenpeace). Greenpeace dedicates a specific website to greenwashing and presents four criteria of the phenomenon:
Author Sign of Greenwashing #
Greenpeace
(2013) Dirty Business: communicating an environmentally friendly product,
while producing it in as unsustainable manner D1
Ad Bluster: exaggerations of environmental achievement in advertising and public relations
D2 Political Spin: advertising ‘green’ under legislative pressure D3 Advertising or branding products with environmental achievement that are already required or mandated by existing laws
D4
Table 6 Greenpeace’s criteria for Greenwashing adopted from its website
18 Conclusion
Both the scientific and non-scientific signs are not yet suitable for greenwashing measurement. The non-scientific models are not suitable, because they are used by means of spotting, and no rules for attaching values are provided. Therefore, one could not distinct a company’s greenwashing degree from that of another. Moreover, spotting does not deliver hard evidence and any stakeholder may classify green initiatives as one in a time shoot. On the other hand, Walker & Wan (2012) have developed a framework in which they developed rules to attach value for greenwashing. They explicitly measure substantive action and symbolic action, in order to eventually determine greenwashing. Since greenwashing is, defined as the difference between environmental disclosure (symbolic action) and environmental performance/ achievements (substantive actions), by measuring symbolic and substantive action to determine greenwashing, one could come to a well-weighted value to (quantifiably) measure greenwashing (Walker & Wan, 2012; Molina & Smith, 2010).
However, their model is dependent on the companies within the sample, because the value is based on a comparison of all companies within the sample, and can therefore be very time consuming. Moreover, to come to a weighted and valid degree of greenwashing, Walker &
Wan’s (2012) research has to be done by one and the same research assistant, who subjectively assigns value to potentially greenwashing practices, in which he has to investigate a large number of companies, whereas my aim is to provide a model which could be used by any stakeholder to determine the degree of greenwashing of any one particular company. It should be one separate method and it should be usable for independent practices.
Furthermore, the tool should not be as time consuming as Walker & Wan’s (2012) manner.
Moreover, I claim that the criteria (e.g. greenhouse gas emissions, product innovation,
lifecycle analysis, environmental management systems, technological development,
recycling, recovery projects, stakeholder engagement, employee training, conservation and
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waste management), they use are limited and insufficient for proper measurement of greenwashing, as greenwashing also contents those criteria that fall beyond the impact on the environment, particularly with regard to environmental disclosure. Indeed, greenwashing contains of two components: the environmental performance and the communication thereof.
For example, unclear language and definitions also fall under the umbrella of greenwashing (BSR, 2009; TerraChoice, 2010) and should be incorporated in the measurement as well, to come to an integrated measure.
I claim that substantive and symbolic actions have to be measured in a quantified manner in order to determine the degree of greenwashing, but other criteria should be used to measure it. In the methodology part I will proceed on the construction of the right measure.
3. Methodology 3.1 Aim of the Study
As discussed, I develop a new tool for any stakeholder to estimate the extent of
greenwashing. The non-scientific models (e.g. BSR, 2009; TerraChoice, 2010) are not
suitable, mainly because they are used by means of spotting, and no rules for attaching values
are provided. Moreover, spotting does not deliver hard evidence, such as a value for
greenwashing. The scientific literature provides insights in the discrepancy between
substantive and symbolic actions (Walker & Wan, 2012; Molina & Smith, 2010), but the
criteria of those models are not complete, as they miss important aspects of greenwashing
(BSR, 2009; TerraChoice, 2010), such as unclear definitions, which could be considered
disinformation. Besides, the measuring of greenwashing as they are presented in the scientific
literature is either time consuming and subject to a sample of more than a significant amount
of companies (>20) is needed (Walker & Wan, 2012), or subjectively executed (Gallicano,
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2011). The aim is to develop a tool, which is accessible and easy to use for any kind of stakeholder.
3.2 Study Design
I claim that substantive and symbolic actions have to be measured in a quantified manner to be able to best measure greenwashing. Both non-scientific and scientific, and qualitative and quantitative literature is used to come up with a sound set of criteria. To reduce the list of all signs and measures (i.e. tables 2 till 6) and to avoid duplication in measurement, I categorize greenwashing, based on the theory (e.g. Gallicano, 2011; BSR, 2009; TerraChoice, 2010; Walker & Wan, 2012; Greenpeace). Besides, it provides the user of the tool with an overview of in what category the greenwashing problem is the most prevalent. How I came to the categorization is explained in appendix A in order to keep focus on the measurement tool. I present 5 categories, having considered all signs and measures: 1.
Environmental focus; 2. Verification; 3. Clearness of definition; 4. Relevance of claims; 5.
Environmental commitment (See: section 3.2.2.).
3.2.1 Unit of Analysis
Walker & Wan (2012) randomly selected 130 companies from the Financial Post’s top 500. Their coding unit of analysis was corporate social responsibility material related to natural environment, and they took the complete website as the unit of analysis and excluded additional (sustainability) reports that are available on those websites, or via external links.
However, I use sustainability reports, because I argue that –in general- sustainability reports contain significant more and better information with regard to environmental performance:
one can expect that all relevant information will be enclosed (i.e. claims are enforced with
more practical information than they would on websites). If the firm at hand does not have a
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sustainability report, the website’s sustainability sector will be used, as the most suitable unit of analysis.
3.2.2 Criteria
Walker & Wan (2012) first identified environmental criteria from the raw data so they could break down the environmental issues firms were engaged in. However, they solely measure the environmental impact, only one of my criteria, which results in limited findings, because other criteria are important as well in determining the degree of greenwashing. This section presents the criteria I use in the tool. Whereas Walker & Wan (2012) only measured symbolic and substantive actions of criterion 5, Environmental Focus, I incorporate criteria from the other literature (e.g. Gallicano, 2011; BSR, 2009; Greenpeace; TerraChoice, 2010) as well, so as to better measure the full range of greenwashing indicators.
3.2.2a Criteria | Environmental Focus
Symbolic | The environmental focus is on one product, whereas the majority of the firm’s products are brown; environmental friendly firm in a dirty industry; the focus is on one environmentally friendly activity, whereas attention gets distracted from the bigger environmental issue; a product is partly green, but most attributes are brown; exaggeration (i.e. emphasizing) of one environmentally friendly activity, whereas it is not clear whether this accounts for all of the firm’s activities. One example is an oil company that is offering climate neutral gasoline, but at the same time exploits environmentally bad gasoline.
Substantive: The environmental focus is clear marked and determined. The firm at hand does not try to gain credit for an initiative that is only partly executed.
3.2.2b Criteria | Verification
Symbolic: Lack of verification means that a firm makes claims, which are not per se
lies, but can neither be proved or verified by a third-party. This category also contains
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falsification issues, as they may be verified by an unauthorized third-party or claims may not be verified at all.
Substantive: Claims are reliably verified by an external party that is specialized in the field of sustainability. An initiative is verified by for example an awarded certification for the specific initiative at hand.
3.2.2c Criteria | Clearness of definition
Symbolic: The non-scientific literature showed that unclear definitions are a means of disinformation and are a means of greenwashing. Symbolic in this sense means unclear definitions and are expressed by fluffy terms, jargon, and pseudo- scientific verbiage (i.e.
words that the regular people are not familiar with).
Substantive: The other side of the medal is clear defined initiatives, which are expressed by a well and understandable explanation, containing of specific words that apply to the initiative. For example, instead of an ‘eco-friendly’ initiative it has to be defined in terms of amount of emission, for instance, to be substantive and clearly defined.
3.2.2d Criteria | Relevance of claims
Is the claim being made even relevant? Are could the relevance vary between different stakeholders?
Symbolic: the claim is not relevant. For example, an initiative is claimed to be green, whereas the action is initiated against violence or danger.
Substantive: it is clear that the claim is relevant. The more a green initiative can be
considered suited (or a suited solution) for a sustainability problem, and it gets the core of the
problem, the more substantive the initiative can be considered.
23 3.2.2e Criteria | Environmental impact
The last category is based on Walker & Wan (2012) and contains their introduced sustainability measures and is entitled Environmental impact, and measures the difference between symbolic and substantive action with regard to: managing greenhouse gas emissions, product innovation, lifecycle analysis, environmental management systems, technological development, recycling, recovery projects, stakeholder engagement, employee training, conservation and restoration, waste management, and independent reviews/ audits .
Symbolic: claims are being made about one or more of the environmental impact factors, but those claims have not (yet) been brought to practice. It is the talk without the walk.
Substantive: initiatives have been communicated through environmental disclosure and those initiatives have actually been carried out.
1.Environmental focus
2.Verification 3. Clearness of definition
4. Relevance of claims
5.Environmental impact
Symbolic Environmental focus of small part
Lack of
honest
verification or falsification
Poorly defined communication
Irrelevant claims
Lack of
Environmental Commitment
Substantive Incorporation of (all) parts
Verification by a third- party or credible label
Clearly defined communication
Relevant claims
Environmental Commitment
Table 8 Recap of the categories for symbolic and substantive actions.
3.2.3 The Rules | Introduction
The way Walker & Wan (2012) chose to measure greenwashing is very time consuming
and suitable for one big investigation, but to a lesser extent suitable for using it as a (one-time
24
use) tool. To come to a final value for greenwashing, the executor of the tool should follow the steps outlined here:
Step 1 | Preparation
Identify the structure of the sustainability report and determine the parts in which sustainability is communicated. Almost every sustainability report contains a table of contents. An overall value of greenwashing should be given for the whole text belonging to every (sub)subheading. For example, the table of contents of Puma’s (2012) (see: Figure 1) report has 9 headings and each heading contains of several subheadings, which in turn have some sub-subheadings. In this case, every subheading should be attached an overall value for greenwashing. If the text under the subheading was (earlier) determined irrelevant, the value 0 has to be noted.
Figure 1 Table of Contents Sustainability Report Puma (2012)
25 Step 2 | Choose the category/ criterion
The analyzed text should fall within one of the criteria from section 3.2.2. It is possible that the text belonging to one subheading could be assigned to more than one criterion/ category. In this case, choose the criterion that is most prevalent and assign a value to it (see step 3). Furthermore, not all criteria are always applicable and criteria do not necessarily have equal weights.
Step 3 | Assigning a value for symbolic action or substantive action
Once the category is determined, a value can be assigned to the action. Not all criteria are always applicable and criteria do not necessarily have equal weights. For both types of action a value from 1 to 3 should be assigned, in which 1 means a low degree of symbolic/
substantive action and 3 means a high degree of symbolic/ substantive action. A value of 0 means that neither type is present within that part of the report.
Walker & Wan (2012) used a 1-7 scale, but found the obstacle of assigning ‘the right’
value to actions. For example, it is difficult and unclear when to assign a value 5 or a value 6 for a particular action. To avoid this ambiguity, and to be able to formulate clear values for each criterion, I chose the range 1-3. The user of the tool is able to precisely assign a value, because every action will fall within one of the value descriptions outlined next.
1. Environmental Focus
Value Symbolic action Substantive action
1 The environmental focus is on one part of a product/ process/ firm, but this has been communicated explicitly.
The environmental focus is on the majority of a product/ process/ firm, but the frames have not been presented/
defined clearly.
2 The environmental focus is on one part The environmental focus is on the
26 of a product/ process/ firm, and this has not been communicated explicitly.
majority of a product/ process/ firm, and the frames have been presented/ defined clearly.
Or, the environmental focus is on the
complete product/ process/ firm, but it has not been clearly defined.
3 There is only a minor part of the product/ process/ firm that is truly green.
The environmental focus is on the complete product/ process/ firm, and the frames have been clearly defined.
2. Verification
Value Symbolic action Substantive action
1 There is no evidence of the claim being truthful, but neither is there evidence for the opposite.
It is likely that the claim is true, based on the argumentation, but there is no evidence.
2 It is likely that the claim is based on false verification, though it cannot be evidenced.
The claim is probably true. The claim is enforced by awards and/or verified by a third-party, although the credibility of these awards and this third-party can be questioned.
3 It is evident that the claim is based on an out-right lie, false (third-party) verification, or false labels.
The claim is highly credible as it is
verified by a reliable third-party.
27 3. Clearness of Definition
Value Symbolic action Substantive action
1 The claim is explained, but it is not (yet) clear what it is about. The claim might be defined incompletely.
The claim has been clearly defined, but the words might be difficult to understand for a regular reader.
2 The claim is explained with vague terms, such as ‘eco-friendly’ or ‘sustainable’.
The claim is explained with clear and concrete terms, but it might be difficult to understand for the regular reader.
3 The claim is explained with totally fabricated words, or words that are not understandable for the reader, who has considerable knowledge.
The claim is defined with clear and concrete terms, which are easy to understand for the regular reader of the report.
4. Relevance of Claims
Value Symbolic action Substantive action
1 The claim might be truthful, for consumers, but unhelpful.
The claim is relevant, because it is about sustainability.
2 The claim is partly aimed at a different concept (e.g. green for danger) .
The claim is relevant, because it is about sustainability and it has added value to the existing initiatives in that field.
3 The claim is aimed at a totally different concept: e.g. an initiative is claimed to be green, but the information provided is about the safety of it.
The claim is relevant, as it gets to the
core of the sustainable problem/ issue at
hand, by presenting an innovative and
feasible initiative.
28 5. Environmental Impact
Value Symbolic action Substantive action
1 The initiative has not been brought to practice, but it is likely that it happens within a short period of time.
The initiative has been visibly brought to practice, but no results have been provided yet by the company.
2 The initiative has not been brought to practice, but the plans to do so have been explained by the company.
The initiative has been brought to practice, and limited results are available.
3 The claims being made are not at all enforced by real actions, findings or initiatives from the past and seem unfeasible.
The initiative has been brought to practice, and extensive results have been presented as well.
Figure 2 shows a sheet that should be used when analyzing the sustainability report.
Criterion | (Chapter) Heading
Explanation Sym. Sub
. Environmental
Focus Subtotal Verification Subtotal Clearness of Definition Subtotal Relevance of Claims Subtotal Environmental Impact
Subtotal Total
Figure 2 Note sheet for symbolic and substantive actions of <Company name>
29
As said, every sustainability report has different sections and subsections. The researchers should end with one overarching conclusion per (sub)subsection, so as to avoid disturbing the relations and to keep oversight.
3.2.3 The Rules | End values | GREENWASHING INDEX (GWI)
The note sheet of figure 2 forms the input for a diagram to visualize the extent of greenwashing, in which symbolic action, substantive action and the value for greenwashing are expressed (see figure 3). One bar is the accumulation of all values for all initiatives in that category for that action, combined. The table and the figure provide values for both symbolic and substantive actions. Accordingly, we can measure the Greenwashing Index (GWI), which is the value of symbolic actions divided by the value of substantive actions.
GWI<1 means that a firm is not greenwashing, but GWI>1 means that a firm is greenwashing. The more the GWI falls above 1, the more a firm is greenwashing.
Figure 2 Idea of measuring greenwashing (example numbers)
-20 0 20 40 60 80 100 120 140
Total value
Criteria
Symbolic actions Substantive actions Greenwashing
30
The categories allow us to compare intra-firm’s greenwashing among different categories, as well as inter-firm and industry comparison, both overall and per category. The greenwashing index for ‘Environmental focus’ in the example would be 1.45 (128 (symbolic)/ 88 (substantive)), which means that this firm is greenwashing according to the tool.
Validity
With regard to previous attempts to measure greenwashing, the face validity of this study is increased, because of the different criteria to which an environmental initiative could be assigned to. If the tool gets executed properly, it could become well visible what part of greenwashing is the most prevalent. Consequently, a stakeholder could make more specific recommendations or solutions to greenwashing.
Reliability
The reliability of the results cannot be considered high, because it requires more testing (than the initial testing). If the tool gains the same results for different users is yet hard to say, because the tool has only been applied by the researcher and writer of the study. To improve reliability, it is therefore necessary for other stakeholders to use the tool and to assess the reliability again.
The reliability of the creation of the tool can be considered moderate high, because the identification and the search of the most prevalent measurement signs and tools will probably provide another researcher with most of the literature described in this study.
However, another researcher could as well use some other literature, resulting in another base
of the tool and perhaps even another approach, but that would not affect the reliability of the
results of this study, because the comparison to a different approach would not be applicable
to determine the reliability of the tool.
31 3.3 Type of Research
This research is theory testing, as several greenwashing articles are cited and used to come up with categories to measure greenwashing. The testing is about whether the signs indeed measure greenwashing properly. The literature review highlights the main ideas that exist among academics and practice.
3.4 Sample size
The sample size of my study is used to test my model of measuring greenwashing. I test 2 or 3 similar companies per industry, in order to compare firms within and between industries. The industries from the sample are strategically chosen. Puma, Nike and Adidas are from the sports apparel and shoe industry, which all manufacture using natural resources, such as cotton. Furthermore, Puma is recently criticized for some of their claims (e.g. the Environmental Profit & Loss Account). Do they claim to be green without substantial action?
What about competitors?
The next two companies are from the car industry, which is a visibly polluting industry. Car manufacturers are recently criticized for their claim of low CO2 emissions, whereas the actual emission is higher than promised. Since this is a form of greenwashing, I chose to analyze sustainability reports from this industry as well.
Barry Callebaut and FrieslandCampina are two companies from the food industry. As people become more conscious about the environment, they might change their nutrition. To appeal for the attention of consumers, food companies will try to attract consumers’ attention.
Do they do this without greenwashing?
This is an initial testing, in order to assess the functionality of the tool. The following companies will be investigated to test the model:
1. Puma
32 2. Nike
3. Adidas 4. BMW Group 5. VW Group 6. Barry Callebaut 7. Friesland Campina
4. Results
In this section I will perform for each company from the sample the tool for greenwashing. Citations are expressed in Italics.
4.1 PUMA
Puma’s sustainability report from 2012 contains 9 chapters with each several subheadings. The chapters are: 1. To our shareholders; 2. PUMAVision; 3. PUMA.safe; 4.
PUMA.peace; 5. PUMA.creative; 6. Brand; 7. Management report; 8. Consolidated Financial Statements, and 9. Managing Directors and Administrative Board of PUMA SE/ Report of the Administrative Board. It has to be noted that this is a ‘Business and Sustainability Report’, so not everything will be relevant to sustainability. In 4. PUMA.peace nothing was said with regard to sustainability. Most of 6. Brand was skipped, because the particular sport sections did not provide information about sustainability. Chapter 9 is solely about the composition of boards, and a few notes are made.
Criterion | (Chapter) Heading
Explanation Sym Sub
. Environmental
Focus
3. Puma’s Clever World
The initiatives such as the InCycle Collection and the Bring me Back Bin are limited to PUMA products, and as such I claim that a real impact on the environment is limited.
2 0
Subtotal 2 0
33 Verification
1. The Puma Share
Moreover, membership in the Dow Jones World / STOXX
Sustainability indices and the FTSE- 4Good index was once again confirmed. Membership of STOXX Sustainability indices does not say something about the perfomence.
0 1
2. Stakeholder engagement
The most prevalent claim of this part is Awards & Recognitions.
Like in previous years, PUMA worked together with a number of analysts in the fields of sustainability and socially responsible investment. By doing so, PUMA remained listed on the FTSE4Good and the DOW JONES Sustainability Index, besides winning several awards and recognitions. However, this claim has not been defined properly, as it the positions in the rankings are unclear.
0 1
5. Independent Assurance Report
Though the review was limited, Puma has attempted to review some of their initiatives with the help from Deloitte & Touche GMBH.
Their findings have not been presented well.
0 1
7. Strategy We have made it our mission to become the most desirable and most sustainable Sport Lifestyle company in the world. Though, nowhere to be found in the clarification of their strategy.
1 0
8. Consolidated Financial Statements
Puma presented their Env Profit & Loss account, but in income statements, these are nowhere to be found.
3 0
Subtotal 4 3
Clearness of Definition
1. Foreword All these product and marketing initiatives are aimed at increasing PUMA’s brand desirability to make further strides on our mission to become the most desirable and sustainable Sportlifestyle company in the world. Is one of the few sentences about sustainability in the Foreword.
2 0
2. People&Puma The highest governance body at PUMA I terms of sustainability is the Sustainability Committee at SE level consisting of François- Henry Pinault (President and General Director PPR SA), Jochen Zeitz (Chief Sustainability Officer PPR SA, through October 2012) and Bernd Illig (employee representative of PUMA SE). This committee meets quarterly to oversee the progress of PUMA against our sustainability targets.
PUMA sustainability management is supported by an external Sustainability Advisory Board, which meets twice a year. It is not very clear what the tasks are of the different committees/ people.
1 0
3. S-Index Presents some sustainability objectives, but it is not clear how these are measured.
1 0
3. PUMA.safe Humanity
Puma constantly talks about sustainable wages and sustainable workplace, without explaining what they mean with that.
2 0
6. Brand strategy A few claims (e.g. ‘becoming the most desirable and sustainable sportlifestyle company’ and ‘we are taking the initiative towards a more sustainable business model and are confident that with the support by our consumers and retailers globally we can make a difference’) do not say a thing about real performance.
2 0
7. Product Development and Design
We continue to develop our Sustainability and Innovation teams in both the Apparel and Footwear divisions with the objective of functioning as internal leaders in our efforts to push the limits of performance design and sustainable practices throughout the value chain. But how?
1 0
Subtotal 9 0
34 Relevance of
Claims
7. Overview 2012 We expanded our group-wide transformation program
and included a cost-reduction program as a means to continue generating ongoing profitable and sustainable growth. Is it about sustainability or profits? Or both? Unclear.
1 0
Subtotal 1 0
Environmental Impact
2. PUMAVision Plans are formulated by means of the Sustainability Scorecard and the Environmental Profit & Loss Account, but there is no past performance figure available.
3 0
3. Environmental Profit & Loss Account
Sustainable initiative, but how can one properly assign economic value to environmental impact? The results are questionable.
1 0
3. PUMA operations
Shows KPIs, for previous years. Results are presented, but are no objectives for the future presented with regard to these KPIs.
0 2
5. Home Oceans In close cooperation with our Sustainability Advisory Board, we are in the process of expanding our award-winning sustainability strategy and Sustainability Scorecard to incorporate further targets in the area of social sustainability that pinpoint to external
audiences the components of A/B+ rated social performance. No claim without results.
1 0
7. Procurement The SAFE (Social Accountability & Fundamental Environmental Standards) Organization, a division of World Cat, is responsible in this regard for a wide range of measures to implement the social and environmental standards in plants, agreed upon with
nternational NGOs. These measures include, among other things, carrying out regular factory audits (primarily with respect to minimum wages, industrial safety, employee development, etc.), introducing courses and training in the area of sustainability with suppliers (so-called “capacity building” with the tag line “help for self-help”), as well as controlling the reduction of the four most important key performance indicators (water and energy consumption, CO2 emissions and waste management) at PUMA itself as well as with
its suppliers.
0 2
7. Risk Categories
PUMA’s human-resources strategy seeks to ensure the long-term sustainability of this successful philosophy. To achieve this goal, a control process is in place to detect and assess human-resources risks. The control process has been implemented, but not clearly defined.
1
Subtotal 5 5
Total 21 8
35
Symbolic action: 22, substantive action 13, greenwashing 9; greenwashing index 1,692, which is GWI>1, so Puma is clearly greenwashing, according to the tool.
4.2 NIKE
Nike’s sustainability report is divided in three relevant parts: I. Strategy, II. How we do business and III. Impact areas. I will analyze all of those three sections and its subsections.
Criterion | (Chapter) Heading
Explanation Sym. Sub
. Environmental
Focus 3. Impracts Overview
Through a variety of processes, including stakeholder consultation and lifecycle assessment, we have identified NIKE, Inc.’s most significant impact areas. These include climate/energy, labor, chemistry, water, waste and community.
0 2
Subtotal 0 2
Verification 1. Targets &
Performance
This vision has been built on years of assessing trends and materiality for Nike and the changes that are impacting our business, our value chain, our consumers and the world. Nike shows that they indeed with assessments of performance and objectives.
0 2
2. Product Design
& Materials
One major improvement in the Nike MSI is that it rates material vendors in addition to materials themselves, providing strong incentives for the vendors to become more environmentally
0 2
-5 0 5 10 15 20 25
Value
Symbolic actions Substantive actions Greenwashing
