About the author Piyush Kumar Jha Chief Manager (Faculty) ULA- Risk Excellence, Union Bank of India Mangaluru,
This term is often used in the context of marketing and advertising, where companies try to capitalize on the growing consumer demand for sustainable and eco-friendly products.
The term greenwashing was first coined in 1986 by environmentalist Jay Westerveld in an article where he decried the common practice of hotels asking guests to reuse towels to help conserve energy. Westerveld claimed that those same hotels did little to help the environment and that the towel request was an act of greenwashing.
Why Do Companies Engage in Greenwashing?
It's simple being seen as ethical drives profitability. A report by McKinsey found that Gen Z (people born roughly between 1996 and 2010) are more likely to spend money on companies and brands seen to be ethical. Another, Nielson's Global Corporate Sustainability Report, found that 66% of consumers will spend more on a product if it comes from a sustainable brand, and that jumps to 73% among millennials. Therefore, companies have a financial incentive to be more socially conscious, or at least appear to.
Some greenwashing is unintentional, due to a lack of knowledge or understanding on the part of management, but sometimes greenwashing is also carried out intentionally through marketing efforts. Companies engaged in greenwashing might use vague or ambiguous terms, exaggerate the positive environmental impact of their products, or highlight a small eco-friendly aspect of their operations while downplaying or ignoring other negative environmental practices. The goal of greenwashing is to attract environmentally conscious consumers and improve the company's reputation without making substantial changes to their actual environmental practices.
How Greenwashing is being done:
This story is from the December 2023 edition of BANKING FINANCE.
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This story is from the December 2023 edition of BANKING FINANCE.
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