I recently had a conversation with a few friends about the connection between brand management and sustainability, and I used the word “greenwashing”. They laughed and said that they had never heard the term before. My reaction was ‘Really??’. One is an IT executive and the other is a neuroscientist, so to be fair neither has daily visibility into either sustainability or marketing, so it is somewhat understandable that they’d never heard this term. The encounter made me realize, however, how those of us in the sustainability world exist in our own little bubbles, speaking our own language and preaching to our own choir. The implications are larger than just a semantic challenge, however. Businesses using the language of “green” in marketing claims run a risk of misleading consumers, either intentionally or unintentionally, and this can erode the value of sustainability as a tool for competitive differentiation.

Terms such as green, natural, and sustainable are popping up everywhere, and their vague definitions are causing confusion among consumers. This creates an especially murky linguistic landscape for marketing departments trying to navigate the new territory of positioning their brands to attract the widest spectrum of “green” consumers without being accused of “greenwashing”.

Greenwashing was a term coined in the late 1980s, and has come to be understood as the use of marketing claims to position a company, product or service as having environmental benefits that are not supported with real evidence. It is the source of much confusion in the marketplace around what kinds of impacts a particular product has on the environment, and which product is better than another. Marketing language that has fueled this confusion includes ‘eco-friendly’, ‘natural’, and ‘green’. These are words that seem obvious on the surface, but what do they really mean? In many cases they mean next to nothing, and that is doing significant harm to the push for true sustainable product innovation because it causes a lack of trust in the marketplace. If skepticism grows among consumers that a choice between a seemingly “sustainable” product and one that is not doesn’t really matter in terms of environmental impact (especially if they are being asked to pay a premium for the sustainable choice), they will stop demanding those sustainable products and companies will be less inclined to produce them.

So for this reason, from a sustainable brand and reputation management perspective, greenwashing is one of those tricky “fine lines” that a company needs to be careful not to cross. Taking a holistic approach to putting sustainability at the core of a business includes leveraging the sustainability performance of a company or product for marketing purposes, but only if the claims made are backed up by real metrics and are communicated clearly to the public. If a company makes claims that aren’t true (or are a stretch of the truth), its sustainability positioning can become more of a liability than an asset.

In an attempt to help provide guidance for sustainability marketing claims, the Federal Trade Commission (FTC) issued an update to their Green Guide, which is the enforcement code aimed at eliminating unclear environmental statements from marketing language. This 36-page set of standards breaks down what is okay and not okay for a company to claim about the environmental attributes of its product, with helpful examples for different scenarios. The document creates clear standards on environmental statements ranging from Carbon Offsets to Compostability to ‘Free of’ claims. One of the more interesting clarifications that the FTC makes is regarding which entities can claim credit for renewable energy. For example, if you build a wind turbine or solar array to generate 100% of the renewable energy required to power your manufacturing facility, you can claim in your marketing materials that your product is ‘Produced With Renewable Energy’. However, if you build the renewable energy generation capacity but instead of using that energy to power your own facility you decide to sell Renewable Energy Certificates (RECs), the company who purchases the RECs gets to make the ‘Made With X % of Renewable Energy’ claim but you cannot.

Many “green” product claims fall into a grey area in terms of these FTC guidelines. For example, I’ve been shopping for a new sofa over the last few months, and since I work in sustainability I thought I would see what was out there in terms of “sustainable” furniture choices. Now, I thought this should be easier for me than for your average consumer since I follow sustainability terms and trends for a living, but oh no! I found lots of choices that use the “natural” terminology to describe their design, but there was no indication if they contained glues and adhesives that would outgas toxic fumes into my living room. Then I found one that claimed the seat cushions were made out of soy and it was labeled as “sustainable”. OK, so soy might be better to have in my living room than, say, foam that outgases formaldehyde, but is manufacturing sofa cushions from soy actually environmentally preferable? Taking modern agricultural practices into the equation (massive use of pesticides, water, and not to mention using a food crop for non-food purposes), the answer is not entirely clear. So if I, a sustainability professional, cannot determine if a “sustainable” marketing claim is meaningful or misleading, how is the general public going to make sense of such claims?

The FTC’s Green Guide is certainly not a cure-all for the greenwashing problems plaguing sustainable brand management efforts, but it at least attempts to raise the bar for what corporate marketing departments can say. Ideally, this will boost consumer confidence in sustainability claims and provide greater brand value for those that truly are putting solid sustainability improvements into their products and enterprises.