The Drivers of Greenwashing

Originally posted by the Luskin Center for Innovation

With more and more firms misleading consumers about firm environmental performance or the environmental benefits of a product or service, how can consumers know what is truly green and what is greenwashed? And how can managers, policymakers, and other organizations decrease the incidence and severity of greenwashing in practice?

To address the drivers of greenwashing and potential mitigation solutions, Magali Delmas, Luskin Center Scholar and Professor in the UCLA Institute of the Environment and Sustainability, along with her co-author Vanessa Cuerel Burbano, debuted the article "The Drivers of Greenwashing." This article is forthcoming in the journal California Management Review.

The skyrocketing incidence of greenwashing can have profound negative effects on consumer confidence in green products, eroding the market that these firms sought to access in the first place. Mitigating greenwashing is particularly challenging in a context of limited and uncertain regulation. While the drivers and effects of firm environmental performance are well understood, there are few tools available to managers or policymakers seeking to analyze the drivers of greenwashing or to mitigate greenwashing.

In this paper, Delmas and Burbano develop a framework examining the drivers of greenwashing and use these drivers to develop recommendations for how to decrease firm greenwashing. They draw from existing work in relevant fields – management, psychology, sociology and economics – which have studied and established factors that can influence individual and firm behavior under various circumstances.

Analyzing these greenwashing drivers in turn, the authors provide recommendations for managers, policymakers, and other institutional entities such as NGOs to decrease the incidence and severity of greenwashing in practice. Delmas and  Burbano draw implications from the drivers of greenwashing to provide recommendations for managers, policymakers, and NGOs to decrease the incidence and severity of greenwashing in practice.

Because the lax and uncertain regulatory environment is both a direct and indirect driver of greenwashing, they emphasize that more stringent, enforced regulation of greenwashing would serve as the most direct means to reduce greenwashing. They recognize, however, that effective implementation of more stringent regulation would be challenging due to a lack of clarity about what constitutes green behavior and confusion surrounding the correct use of green adjectives such as biodegradable and all-natural; and could even have the unintended consequence of decreasing firms’ use of otherwise helpful green claims. Given these challenges, they consider it unlikely that there will be significant greenwashing regulatory change in the near future. Thus, they emphasize that there are also important ways that managers of both greenwashing and non-greenwashing firms, in addition to policymakers and NGOs, can work towards decreasing the incidence of greenwashing in the current regulatory context. These include increasing the transparency of environmental performance, increasing knowledge about greenwashing, and effectively aligning intra-firm structures, processes, and incentives.

Click here to read the full article.