From the point of non-existence in the mid-1990s to the highest point of concern in 2023, environmental issues such as climate change, plastics pollution, and loss of biodiversity have come a long, or rather a short, way. Professors Jako Volschenk, Charlene Gerber, and Researcher Bruno A. Santos of Stellenbosch Business School show the important and increasing role of this concern and awareness in consumer attitudes.
The Impact of Greenwashing on Consumer Attitudes by CoBS Editor Pavan Jambai, with kind acknowledgements to Jako Volschenk and Charlene Gerber. Related research: Volschenk, J., Gerber, C. & Santos, B.A., 2022, ‘The (in)ability of consumers to perceive greenwashing and its influence on purchase intent and willingness to pay’, South African Journal of Economic and Management Sciences 25(1), a4553. https://doi.org/10.4102/ sajems.v25i1.4553
As the number of people realizing the impact of their behaviour on climate change and environmental degradation constantly increases, the demand for environmentally friendly (green) products is skyrocketing. Given that green products are recyclable, organic, made from recycled materials, or their production has a smaller carbon footprint, this is a trend we can get behind.
With a narrow and strictly lucrative perspective of this increased demand, some businesses, under the veil of being ‘smart’, commit greenwashing. This is when a firm makes vague, exaggerated, or even false claims that its products are green when in fact they are not. Are consumers knowledgeable enough to identify greenwashing and if they do, how do they respond to it?
Consumers vs Greenwashing
Profs Volschenk, Gerber, and research fellow Santos find, to the credit of greenwashing companies, that environmental claims reward all companies, even when such claims are false. Furthermore, it is found that informing consumers on environmental issues does not actually give them the ability to identify greenwashing.
In response to a greenwashed advertisement, research has found that the willingness to pay and the purchase intent of consumers equipped with greenwashing knowledge were significantly lower than those who were not equipped with such knowledge. The experiment illustrates the categorical need to educate consumers on greenwashing practices.
Unfortunately for greenwashing companies, consumers also levy a greenwash penalty on a false claim. Their willingness to pay for a greenwashed product is even lower than for a conventional product (i.e. with no green claims). In this study, this penalty equated to a penalty of about 13% compared to a product with no claim. With the advent of social media – where even the slightest slip-up could be catastrophic – firms need to be aware of such consumer behaviours.
Consumers and Firms: Two heads are better than one
As the threat of greenwashing looms over consumers, the onus of educating them on this unethical practice falls upon the marketers of truly green products and services. It might well be a blessing in disguise, since educating consumers not only increases the purchase intent for their products but also exposes their competitors’ fake claims.
In this endeavor of educating consumers, the most beneficial path for truly green firms would be to collaborate with each other. When one green company launches a greenwashing awareness campaign, it not only allows consumers to identify green products of other companies but also reduces the risk of free-riding from fake green companies.
Another significant reason for collaboration between green companies is the ability to share the costs of creating greenwashing awareness. As such, awareness campaigns are usually expensive, time-consuming, and long – reminding us yet again that two heads are better than one. While the intention may be noble, the life-blood of any business is still, unfortunately, the bottom line.
Trust: Easy to break, difficult to mend
All in all, Profs Volschenk, Gerber, and researcher Santos claim that despite having environmental knowledge, the vast majority of consumers are not able to identify a greenwashed advertisement. Again, it highlights the immediate need to educate consumers about greenwashing and also offers a unique opportunity for collaboration among real green companies.
Businesses, just like relationships, are built on trust. Indeed, it might be the singular commonality among all successful companies. And while it needs years or perhaps even decades to win consumers’ trust, all it takes is one single false claim to ruin it. In the current information age, businesses should be scrupulous before indulging in such practices.
Useful links:
- Link up with Profs Jako Volschenk and Charlene Gerber on LinkedIn
- Read a related article: Consumers and increased demand for certified products
- Discover Stellenbosch Business School, South Africa
- Apply for the Stellenbosch MBA.
Learn more about the Council on Business & Society
The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.
Member schools are all “Triple Crown” accredited AACSB, EQUIS and AMBA and leaders in their respective countries.
- ESSEC Business School, France-Singapore-Morocco
- FGV-EAESP, Brazil
- School of Management Fudan University, China
- IE Business School, Spain
- Keio Business School, Japan
- Stellenbosch Business School, South Africa
- Trinity Business School, Trinity College Dublin, Ireland
- Warwick Business School, United Kingdom.
