Why even well meaning companies struggle to go green, and how we can separate real progress from clever marketing. Laura Sofía Del Castillo, Master in Sustainability & Business Transformation student at IE Business School, uncovers the systemic barriers to genuine change – and what consumers, regulators and companies must do to turn green promises into reality

The Green Illusion: Why big businesses struggle to go sustainable – and how they can succeed by Laura Sofia Del Castillo.

Sustainability has become the corporate mantra of the decade. Consumers demand greener products, governments tighten regulations, and companies promote their environmental commitments. Yet, behind the sustainability reports and carbon-neutral claims, many businesses struggle with real transformation.

A 2023 EU Commission report found that 53% of green claims made by companies were vague, misleading or unsubstantiated (European Commission, n.d.). Why is it so hard for established companies to truly become sustainable, and what can they do to fix this?

The Sustainability Transformation Dilemma

Sustainability requires upfront investment, whether in renewable energy, supply chain transparency, or circular economy models. However, publicly traded companies face quarterly financial expectations that often prioritise immediate profits over long-term sustainability goals. Fast fashion giants like H&M and Zara have launched “eco-conscious” lines, yet their business model still relies on high-volume, low-cost production, contradicting true sustainability principles (Earth.Org, 2023).

This contradiction captures the dilemma at the heart of sustainability transformation: can a company ever be truly sustainable without slowing down production and embracing full transparency? If so, how do we reconcile economic performance with environmental and social responsibility?

Greenwashing: A Shortcut with Consequences

When real sustainability is too expensive or complex, many companies resort to greenwashing, marketing a product or service as more sustainable than it actually is. This is evident across multiple industries. In the meat sector, for example, JBS has promoted high-profile sustainability campaigns like “Net Zero by 2040” while continuing to source cattle from suppliers linked to illegal deforestation in Brazil’s Amazon and Pantanal wetlands. Greenpeace Unearthed revealed gaps in JBS’s supply chain monitoring, and the New York Attorney General filed a lawsuit in 2024 accusing the company of misleading consumers through unsupported environmental claims (Greenpeace Unearthed, 2024), (ESG Today, 2024).

Greenwashing often manifests through tactics like making vague or unsubstantiated claims, highlighting minor eco-friendly actions while concealing broader environmental harm, or using misleading imagery and slogans. A widely cited example involves Coca-Cola, whose marketing around “100% recycled plastic” was questioned for applying only to a single product line, despite visual cues suggesting it included all their brands (Laville, 2022). Similarly, Nestlé has faced criticism for regularly modifying its sustainability goals before meeting previous ones, a practice that undermines credibility and clouds transparency (Nestlé, as cited in Planet Tracker, 2022).

The continued reliance on terms like “net zero,” “carbon neutral,” or “eco-friendly” without standard definitions has made it difficult for consumers and investors to verify corporate sustainability claims. In response, regulatory efforts are ramping up. The European Union’s Green Claims Directive aims to crack down on misleading marketing by requiring companies to back up their environmental claims with independently verified data (European Parliamentary Research Service, 2024).

When Regulation Isn’t Enough

Without universal sustainability standards, companies exploit regulatory inconsistencies to appear greener than they are. This is especially prevalent in regions where ESG reporting is voluntary or poorly enforced.

The EU’s Green Claims Directive is a promising step, but in countries like the United States, where ESG guidelines remain largely self-regulated, the risk of greenwashing persists. This disparity in global regulation allows multinational corporations to present a sustainable image in one market while operating less responsibly in another.

Even companies genuinely committed to sustainability face significant challenges. Transitioning supply chains to prioritise ethical sourcing and biodegradable materials can be both expensive and time-consuming. Shifting from a linear to a circular business model often requires major infrastructure overhauls. Moreover, sustainable products frequently come at a higher price point, which can alienate price-sensitive consumers.

Moving from Claims to Change

Transparency is a key indicator of genuine sustainability. Patagonia, for example, openly shares information about its supply chain and acknowledges both successes and areas for improvement. This level of honesty has helped build trust with consumers and serves as a model for accountability in the industry (Patagonia, n.d.).

In contrast to superficial claims, companies like Unilever are embedding sustainability into their core operations. Their investment in circular packaging solutions and reduction of plastic waste demonstrate that profitability and environmental responsibility can coexist (Unilever, n.d.). At the same time, firms like LVMH are supporting sustainability-focused startups through internal accelerators, and Microsoft has committed to becoming carbon negative by 2030, showing that internal innovation can drive long-term change (LVMH, 2023), (Smith, B. 2020).

Beyond Branding: The Future of Corporate Sustainability

With increasing regulatory scrutiny, investor pressure, and consumer awareness, companies will soon have little choice but to move beyond performative sustainability. As misleading practices become riskier, businesses that fail to transition authentically may face reputational damage and financial loss.

The question remains whether sustainability will evolve from a branding strategy into a fundamental part of corporate identity. The future will depend on whether businesses can shift from reactive compliance to proactive leadership, and whether consumers and regulators will hold them to account.

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