Authors: Nils Pappenberg
Edited by:
Last updated: July 10, 2026
Executive summary
Greenwashing occurs when an organization presents its environmental responsibility as stronger than its actual environmental performance. It can take the form of exaggerated or false claims, selective disclosure of positive information, vague terms such as environmentally friendly, misleading labels, nature-based visual design, or future-oriented promises that are not supported by credible implementation plans.
For organizations, greenwashing is not only a communication risk but a structural management problem. It often emerges when sustainability is treated mainly as a reputation-building tool rather than being embedded in strategy, governance, operations, incentives, and decision-making. Market pressure, growing stakeholder demand for sustainable products and services, weak regulation, limited transparency, poor internal coordination, and short-term performance incentives can all increase the risk.
The consequences are significant. Although misleading sustainability communication may create short-term image benefits, exposure can damage reputation, erode consumer and investor trust, invite legal action, and weaken relationships with stakeholders and business partners. Greenwashing can also harm entire markets by making it harder for credible organizations to distinguish themselves and by increasing public skepticism toward sustainability claims.
Preventing greenwashing requires organizations to align sustainability communication with verifiable performance. This includes embedding sustainability objectives into corporate strategy, assigning clear responsibilities, coordinating across functions, involving stakeholders, and linking incentives to actual sustainability outcomes rather than communication success alone. Organizations should systematically measure sustainability performance across the value chain, compare public claims with evidence-based indicators, and identify gaps before communicating externally.
Credible prevention also depends on transparent reporting, reliable standards, independent verification, and careful legal and technical review of sustainability claims. Established reporting frameworks, recognized labels, credible certification schemes, measurable interim targets, and third-party assurance can reduce information asymmetries and strengthen trust. However, these tools are effective only when supported by robust internal controls and a sustainability culture that encourages honest communication about both progress and remaining challenges.
1 Introduction
In recent years, sustainability has become a key area of focus for companies. In light of advancing climate change, dwindling natural resources, and increasing societal and regulatory demands, pressure is mounting on companies to assume environmental responsibility and credibly integrate sustainable business practices into their operations.1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020). At the same time, environmental and sustainability considerations are also becoming increasingly important to consumers and investors alike, influencing purchasing and investment decisions. Sustainability is thus no longer merely an expression of voluntary corporate commitment but is increasingly evolving into a strategic factor for competitiveness and success. As the importance of sustainability grows, so do expectations that companies will communicate their environmental and sustainability performance in a transparent and verifiable manner.1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020).2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). This growing importance of sustainability offers companies the opportunity to differentiate themselves from competitors by communicating their environmental and sustainability-related achievements and to strengthen their reputation. At the same time, however, this development also creates incentives to portray sustainability performance in a more positive light than it actually is in order to benefit from the growing demand for environmentally friendly products and services.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).3Yang, Z., Huong, N. T. T., Nam, N. H., Nga, N. T. T. & Thanh, C. T. Greenwashing behaviours: Causes, taxonomy and consequences based on a systematic literature review. Journal of Business Economics and Management (JBEM) 21, 1486–1507 (2020). Against this backdrop, greenwashing has gained considerable significance in recent years, both in academic research and in corporate practice.4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246. This development underscores the need to systematically analyze the phenomenon and make scientific findings applicable to corporate practice.
2 Literature review
This chapter provides a systematic overview of the current state of research on greenwashing in the context of sustainability management. The aim is to synthesize key findings systematically from the literature and develop a structured understanding of the concept. The literature review first addresses the conceptual foundations and historical development of the greenwashing concept and then focuses on its main forms and the underlying communication strategies. It then examines the causes from a corporate perspective as well as the resulting impacts on consumers, companies, and markets. Finally, approaches discussed in the literature for preventing greenwashing are categorized, and the current state of research is critically reflected upon.
2.1 Conceptual foundations and historical development of the greenwashing concept
Against the backdrop of an increasing societal and political focus on sustainability, companies’ communication of environmental responsibility has gained considerable importance in recent decades.1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020). In this context, the term “greenwashing” has garnered increasing attention in both academic research and corporate practice.
The development of the concept of greenwashing is closely linked to growing societal environmental awareness. As early as the 1970s, environmental issues increasingly came into the public spotlight and became a permanent fixture in societal discourse. As environmental and sustainability issues gained prominence, companies began to increasingly communicate the environmental friendliness of their products and business practices in order to benefit from the advantages of growing green markets.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). As a result, communicating environmental responsibility became increasingly important and evolved into a key component of companies’ public image. Even before the term was actually coined, there were advertising campaigns in which companies highlighted their environmental responsibility, although their actual environmental performance was sometimes viewed critically. An early example is the “People Do” campaign by the oil company Chevron in 1985, in which numerous employees advocated for the protection of selected animals. With this large-scale advertising campaign, the company specifically highlighted its environmental activities and targeted environmentally conscious segments of the population in particular. In retrospect, the campaign is classified in the literature as a classic example of successful greenwashing, as it contributed significantly to a positive perception of the company’s environmental responsibility, even though the environmental impacts of its core business continued to be the subject of critical debate.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246. Against the backdrop of such discrepancies, the American environmental activist Jay Westerveld coined the term “greenwashing” in 1986. In doing so, he criticized the practice of hotels urging their guests to reuse towels under the pretext of environmental protection, even though the primary motivation was cost savings.6Wolniak, R. & Hąbek, P. Reporting Process of Corporate Social Responsibility and Greenwashing. International Multidisciplinary Scientific GeoConference : SGEM 5, 483–490 (2015). Even this early use of the term highlights the central contradiction between communicated environmental responsibility and actual corporate behavior. Initially, however, the term remained largely confined to the circle of environmental activists. Since the 1990s, it has become increasingly widespread and has been used more frequently in the context of criticism of multinational corporations’ environmental communication. With the growing prevalence of sustainability and CSR concepts, greenwashing has ultimately developed into an established subject of research in the fields of sustainability, management, and communication studies since the 2000s.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246.
In recent research, greenwashing is understood as a discrepancy between communication and actual environmental performance. Bernini et al. (2023)7Bernini, F., Giuliani, M. & La Rosa, F. Measuring greenwashing: A systematic methodological literature review. Business Ethics Env & Resp 33, 649–667 (2024). define greenwashing as a “mismatch between corporate communication and performance on environmental issues” (p. 1). Delmas & Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). adopt a similar understanding of the term, describing greenwashing as “poor environmental performance coupled with positive communication about environmental performance” (p. 65). This discrepancy can arise both from deliberately misleading statements and from selective disclosure of information or the emphasis on irrelevant environmental aspects.1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020). Since the term was coined, there has been a significant increase in academic publications and definitional approaches to the concept of greenwashing.8Laufer, W. S. Social Accountability and Corporate Greenwashing. Journal of Business Ethics 43, 253–261 (2003). This diversity of definitional approaches highlights the complexity of the term and makes it difficult to distinguish it from related concepts.1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020).9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Against this backdrop, a clear conceptual distinction between greenwashing and conceptually similar forms of strategic sustainability communication is necessary.
This includes, among other things, what is known as “greenhushing,” in which companies deliberately refrain from publicly communicating sustainability measures that actually exist. This stems from companies’ fear that their sustainability communications could be accused of greenwashing and thus perceived as lacking credibility.10Font, X., Elgammal, I. & Lamond, I. Greenhushing: the deliberate under communicating of sustainability practices by tourism businesses. Journal of Sustainable Tourism 25, 1007–1023 (2017).11Kleinschmidt, J. & Breitbarth, T. Greenwashing: Die dunkle Seite der Nachhaltigkeitskommunikation aufdecken und vermeiden. in CSR und Nachhaltigkeit im Sport: Konzeption, Kommunikation, Berichterstattung (eds Breitbarth, T., Breuer, M. & Kleinschmidt, J.) 201–212 (Springer, Berlin, Heidelberg, 2025). doi:10.1007/978-3-662-71337-2\_13.
Furthermore, greenwashing must be distinguished from the concept of “whitewashing,” which refers to the misleading portrayal of social and ethical responsibility. In this context, companies convey the impression of responsible social behavior without this being underpinned by corresponding measures or actual changes. Unlike greenwashing, which primarily concerns ecological aspects, whitewashing refers to the social dimension of sustainability.12Seele, P. Greenwashing. in Handbuch Wirtschaftsethik (ed. Aßländer, M. S.) 727–730 (J.B. Metzler, Stuttgart, 2022). doi:10.1007/978-3-476-05806-5\_77.
Overall, it is evident that greenwashing is characterized by the discrepancy between a company’s communicated and actual environmental performance and exists at the intersection of rising societal demands and corporate sustainability communication. For the purposes of this paper, greenwashing is therefore defined as the portrayal of a company’s environmental responsibility as being greater than its actual environmental performance and activities. This manifests itself in various forms and is based on specific strategies.
2.2 Forms and strategies of greenwashing
Having outlined the conceptual foundations of greenwashing in the previous section, the following section focuses on its forms and strategies. Greenwashing can manifest itself in various ways. Its forms range from misleading environmental claims to visual design elements and various ways of presenting sustainability performance. For clarity, the specific forms of greenwashing at the product and corporate levels are presented first. This is followed by an analysis of the communication strategies through which companies can create an idealized image of their environmental and sustainability performance.
2.2.1 Forms of greenwashing
Greenwashing encompasses various types of misleading environmental communication. Generally, a distinction can be made between forms of greenwashing at the product level and at the corporate level. At the product level, environmental claims refer to individual products or services, whereas at the corporate level, the entire company’s commitment to sustainability is communicated in a misleading manner. At both levels, greenwashing can be conveyed through specific statements or visual design elements.1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020). The literature often distinguishes between “claim greenwashing” as a statement-based form and “executional greenwashing” as a design-based form of greenwashing.11Kleinschmidt, J. & Breitbarth, T. Greenwashing: Die dunkle Seite der Nachhaltigkeitskommunikation aufdecken und vermeiden. in CSR und Nachhaltigkeit im Sport: Konzeption, Kommunikation, Berichterstattung (eds Breitbarth, T., Breuer, M. & Kleinschmidt, J.) 201–212 (Springer, Berlin, Heidelberg, 2025). doi:10.1007/978-3-662-71337-2\_13.13Parguel, B., Benoit-Moreau, F. & Russell, C. A. Can evoking nature in advertising mislead consumers? The power of ‘executional greenwashing’. International Journal of Advertising 34, 107–134 (2015).
The former uses environmental statements to create an overly positive impression among the target audience regarding the ecological characteristics of a product, a service, or a company. This deception can take various forms. For example, greenwashing often occurs through false statements, the omission of essential information, or the use of vague and ambiguous terms such as “environmentally friendly” or “healthy.”12Seele, P. Greenwashing. in Handbuch Wirtschaftsethik (ed. Aßländer, M. S.) 727–730 (J.B. Metzler, Stuttgart, 2022). doi:10.1007/978-3-476-05806-5\_77. Furthermore, environmental claims can refer to different levels, such as product characteristics, production processes, or the company’s overall image.1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020).
In addition to verbal statements, greenwashing can also be achieved through visual and design elements. In so-called “executional greenwashing,” no specific environmental claims are made. Instead, the targeted use of colors, images of nature, and other nature-related design elements evokes associations with nature and environmental friendliness. Examples include depictions of nature such as forests, bodies of water, or landscapes, as well as nature-inspired colors that evoke positive environmental associations among consumers.1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020).13Parguel, B., Benoit-Moreau, F. & Russell, C. A. Can evoking nature in advertising mislead consumers? The power of ‘executional greenwashing’. International Journal of Advertising 34, 107–134 (2015).
To further clarify the concept of “claim greenwashing,” the typology “The 7 Sins of Greenwashing,” developed by TerraChoice (2010), can be consulted.14Terrachoice Environmental Marketing Inc. The Sins of Greenwashing. https://www.twosides.info/wp-content/uploads/2018/05/Terrachoice_The_Sins_of_Greenwashing_-_Home_and_Family_Edition_2010.pdf (2010). It is one of the best-known approaches to systematizing misleading environmental communication at the product level and describes typical manifestations through which environmental claims can be distorted, unsubstantiated, or presented in a misleading manner. The typology illustrates that misleading environmental claims can take various forms, ranging from unsubstantiated or ambiguous statements to outright false environmental assertions. The individual categories of the typology are presented in Table 1.
| Form of Greenwashing | Description |
| Hidden Trade-off | Emphasizing individual positive environmental characteristics while simultaneously omitting other relevant environmental impacts. |
| No Proof | Environmental claims that cannot be substantiated by verifiable evidence. |
| Vagueness | Use of unclear, general, or ambiguous environmental terms whose actual meaning remains unclear. |
| Irrelevance | Factually correct environmental information that has no significant informational value for assessing a product’s environmental friendliness. |
| Lesser of Two Evils | Highlighting relative environmental advantages within a fundamentally environmentally harmful product category, thereby diverting attention from the overarching environmental impacts. |
| Fibbing | Use of demonstrably false or inaccurate environmental claims. |
| Worshipping False Labels | The use of symbols, seals, or graphic elements that give the impression of independent certification, even though no such certification actually exists. |
Table 1: The “Seven Sins of Greenwashing” according to TerraChoice14Terrachoice Environmental Marketing Inc. The Sins of Greenwashing. https://www.twosides.info/wp-content/uploads/2018/05/Terrachoice_The_Sins_of_Greenwashing_-_Home_and_Family_Edition_2010.pdf (2010). (own presentation)
Overall, the examples presented illustrate that greenwashing can be conveyed both through specific environmental statements and through visual design elements.
2.2.2 Strategies for sustainability communication
In addition to the possible forms listed above, communication strategies can be used to classify greenwashing. The focus here is on how sustainability communication can be used to specifically influence the perceptions of various stakeholders.
Sustainability communication involves communicating environmental and social activities to various stakeholders and serves to highlight sustainability performance, build trust, and strengthen a company’s reputation.15Hillmann, M. Das 1×1 der Unternehmenskommunikation: Ein Wegweiser für die Praxis. (Springer Fachmedien Wiesbaden, Wiesbaden, 2025). To systematize these strategies, Bernini et al. (2023)7Bernini, F., Giuliani, M. & La Rosa, F. Measuring greenwashing: A systematic methodological literature review. Business Ethics Env & Resp 33, 649–667 (2024). distinguish between active and passive greenwashing. The authors define active greenwashing as the deliberate communication of misleading, exaggerated, or insufficiently substantiated information about a company’s environmental performance. Passive greenwashing, on the other hand, occurs when relevant information is deliberately withheld or omitted. While symbolic communication, future narratives, and the strategic use of sustainability signals predominantly represent forms of active greenwashing, passive greenwashing manifests itself particularly in the selective disclosure of information. This distinction illustrates that greenwashing can arise both through the active shaping of communication content and through the deliberate omission of relevant information.7Bernini, F., Giuliani, M. & La Rosa, F. Measuring greenwashing: A systematic methodological literature review. Business Ethics Env & Resp 33, 649–667 (2024).
A central strategy of greenwashing is the selective disclosure of information, or “selective disclosure.”9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Companies deliberately highlight positive aspects of their environmental performance, while negative impacts or problematic business practices are addressed only to a limited extent or not at all.3Yang, Z., Huong, N. T. T., Nam, N. H., Nga, N. T. T. & Thanh, C. T. Greenwashing behaviours: Causes, taxonomy and consequences based on a systematic literature review. Journal of Business Economics and Management (JBEM) 21, 1486–1507 (2020).9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). This creates a distorted picture of the company’s actual sustainability performance for stakeholders. Lyon and Maxwell (2015) describe the selective provision of information as a fundamental mechanism of greenwashing, defining “greenwash as the selective disclosure of positive information about a company’s environmental or social performance, without full disclosure of negative information on these dimensions, so as to create an overly positive corporate image” (p. 9).9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). De Freitas Netto et al. (2020)1De Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B. & Soares, G. R. D. L. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19 (2020). identify the highlighting of positive environmental information while withholding negative information as a characteristic feature of greenwashing. Against the backdrop of the distinction made by Bernini et al. (2023)7Bernini, F., Giuliani, M. & La Rosa, F. Measuring greenwashing: A systematic methodological literature review. Business Ethics Env & Resp 33, 649–667 (2024). between active and passive greenwashing, the selective disclosure of information can be classified as passive greenwashing.
In addition to selectively sharing information, companies often use symbolic communication strategies to signal sustainability. In doing so, they communicate environmental goals, sustainability guidelines, or ecological commitments without these being reflected to the same extent in their actual business activities.9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Lyon and Montgomery (2015) refer to such practices as “empty green claims and policies” (p. 237).9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Bowen & Aragon-Correa (2014) classify this behavior under the concept of “symbolic corporate environmentalism” (p. 108).16Bowen, F. & Aragon-Correa, J. A. Greenwashing in Corporate Environmentalism Research and Practice: The Importance of What We Say and Do. Companies thus attempt to meet societal expectations regarding sustainability through communication and to gain legitimacy without adjusting their actual activities to the same extent. In these cases, sustainability communication serves primarily to safeguard reputation and project a positive public image, while substantial environmental improvements fail to materialize. Greenwashing thus arises not only from false statements but also from symbolic communication measures, exaggerations, or the highlighting of environmental activities that are not sufficiently supported by actual action.
Another strategy involves the targeted use of narratives and promises for the future. Sustainability communication is increasingly no longer limited to presenting current achievements but also encompasses long-term goals and visions for the future. Lyon & Montgomery (2015)9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). point out that companies can influence the interpretation of their environmental performance through communicative narratives and discourses. Montgomery et al. (2023)4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda. show that, in particular, the communication of climate neutrality goals and long-term promises for the future aimed at reducing environmental impacts has gained considerable significance in recent years. This form of communication becomes problematic when those future goals are not supported by concrete measures, verifiable interim targets, or transparent implementation plans. The authors refer to this form of misleading communication about the future as “futurewashing.”4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda. Future-oriented sustainability communication can thus help to mask current shortcomings in environmental performance and positively influence stakeholders’ perceptions.
Furthermore, the use of environmental labels, certifications, sustainability seals, and ESG ratings (Environmental, Social, and Governance Ratings) constitutes a greenwashing strategy. These tools enjoy a high degree of credibility among many stakeholders, as they are intended to make sustainability performance visible and facilitate its assessment. In particular, labels and certifications serve to communicate environmental performance based on external standards and to reduce information asymmetries between companies and stakeholders.3Yang, Z., Huong, N. T. T., Nam, N. H., Nga, N. T. T. & Thanh, C. T. Greenwashing behaviours: Causes, taxonomy and consequences based on a systematic literature review. Journal of Business Economics and Management (JBEM) 21, 1486–1507 (2020).4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda. For consumers, they thereby make it easier to evaluate products and companies and can enhance the credibility of communicated sustainability performance. ESG ratings complement this function by evaluating companies based on environmental, social, and corporate criteria, thereby enabling investors in particular to assess sustainability performance.4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda.
In the context of greenwashing, these tools can be used strategically to positively influence perceptions of sustainability performance. Companies can specifically advertise using labels, certifications, or positive sustainability ratings, thereby increasing the credibility of their sustainability communications. This may occur particularly when companies exaggerate their actual environmental performance or deliberately advertise using labels that are not very meaningful or difficult to verify. One example of this is the “Climate Pledge Friendly” label used by the global corporation Amazon, which indiscriminately classifies various products as sustainable and climate-friendly, even though these products “differ significantly in terms of their specific environmental impacts.”17Greenwashing: Amazons Climate Pledge Friendly. https://konsument.at/greenwashing-amazons-climate-pledge-friendly/5908 (2021). Montgomery et al. (2023)4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda. point out that certifications, sustainability ratings, and similar assessment tools are playing an increasingly important role in the discourse on greenwashing and can contribute both to curbing and to promoting greenwashing. Furthermore, environmental claims and sustainability labels are not always subject to uniform standards and can therefore be interpreted in different ways. Labels, certifications, and environmental claims thus play an ambivalent role: On the one hand, they can create transparency and enhance the credibility of sustainability information; on the other hand, the use of labels that are not very meaningful or that are purportedly independent can contribute to distorting perceptions of sustainability performance.14Terrachoice Environmental Marketing Inc. The Sins of Greenwashing. https://www.twosides.info/wp-content/uploads/2018/05/Terrachoice_The_Sins_of_Greenwashing_-_Home_and_Family_Edition_2010.pdf (2010). It is clear that while the growing importance of sustainability issues opens up numerous opportunities for companies to communicate their environmental performance, it also increases the risk that sustainability communication will be used to exaggerate or distort actual performance.
2.3 Causes of greenwashing from a corporate perspective
The current state of research shows that the emergence of greenwashing cannot be attributed to a single cause. Rather, greenwashing is understood as the result of various influencing factors that operate at different levels.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). As Figure 1 illustrates, Delmas and Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). distinguish between external, internal organizational, and individual psychological factors that, when acting in concert, can facilitate the emergence of greenwashing. The literature discusses numerous causes, ranging from regulatory and market-related conditions to internal organizational structures and individual decision-making processes.

Figure 1: Drivers of greenwashing (own illustration based on Delmas and Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011)..
With the growing demand for sustainable products and services, environmental attributes have increasingly become a competitive differentiator. By credibly communicating their sustainability performance, companies can set themselves apart from competitors, strengthen their market position, and tap into new customer groups. At the same time, this increases the incentives to communicate environmental responsibility more strongly than it is actually implemented.18Şenyapar, H. N. D. Unveiling Greenwashing Strategies: A Comprehensive Analysis of Impacts on Consumer Trust and Environmental Sustainability. Journal of Energy Systems 8, 164–181 (2024). Delmas and Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). therefore identify, in particular, the rising demand from consumers and investors for sustainable offerings and competitive pressure within a market as key external drivers of greenwashing.
Environmental communication serves companies not only to showcase their sustainability performance, but can also help them tap into new market potential and strengthen their reputation.19Chen, Y.-S. & Chang, C.-H. Greenwash and Green Trust: The Mediation Effects of Green Consumer Confusion and Green Perceived Risk. J Bus Ethics 114, 489–500 (2013). Lyon and Maxwell (2011)20Lyon, T. P. & Maxwell, J. W. Greenwash: Corporate Environmental Disclosure Under Threat of Audit. Journal of Economics & Management Strategy 20, 3–41 (2011). point out that companies use voluntary environmental disclosures strategically, particularly when they expect to gain economic advantages from doing so and assess the risk of exposure as low. This cost-benefit analysis favors the selective disclosure of positive environmental information and can thereby encourage greenwashing. Yang et al. (2020)3Yang, Z., Huong, N. T. T., Nam, N. H., Nga, N. T. T. & Thanh, C. T. Greenwashing behaviours: Causes, taxonomy and consequences based on a systematic literature review. Journal of Business Economics and Management (JBEM) 21, 1486–1507 (2020). also conclude in their literature review that market opportunities and competitive pressure are among the key causes of greenwashing. Furthermore, recent research indicates that companies are increasingly aligning their sustainability communications with the expectations of their market environment and the behavior of other market participants. This can prompt companies to present their own environmental performance in a more positive light in order to avoid competitive disadvantages.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246.
In addition to market- and competition-related factors, regulatory frameworks also influence the emergence of greenwashing. According to Delmas and Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). and Yang et al. (2020)3Yang, Z., Huong, N. T. T., Nam, N. H., Nga, N. T. T. & Thanh, C. T. Greenwashing behaviours: Causes, taxonomy and consequences based on a systematic literature review. Journal of Business Economics and Management (JBEM) 21, 1486–1507 (2020)., inadequate legal requirements, inconsistent standards, and limited enforcement of existing regulations can encourage companies to exaggerate their environmental performance or make imprecise environmental claims. Low transparency and a lack of comparability in sustainability-related information further make it difficult for external stakeholders to reliably assess a company’s actual environmental performance. This reduces the likelihood that misleading sustainability communications will be identified or sanctioned, which can further facilitate greenwashing. Delmas and Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). emphasize that a lax and uncertain regulatory environment plays a key role in this regard, as it not only directly facilitates greenwashing but can also amplify the impact of other external and internal factors.
In addition to the external factors described above, Delmas and Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). identify internal organizational factors that significantly determine how companies respond to external demands. If financial metrics and short-term corporate success are weighted more heavily than actual sustainability performance, this can create incentives for greenwashing.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). Shared values, leadership principles, and the ethical corporate culture shape the importance of sustainability within an organization, so that a weak ethical corporate culture can further facilitate the emergence of greenwashing.21Martin, K. D. & Cullen, J. B. Continuities and Extensions of Ethical Climate Theory: A Meta-Analytic Review. J Bus Ethics 69, 175–194 (2006). Similarly, inadequate internal communication and coordination processes can lead to inconsistencies in how sustainability information is disseminated within the company. This increases the risk of misleading sustainability communication.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246. Furthermore, organizational inertia can lead to delays in the implementation of announced sustainability goals. This can result in discrepancies between communicated sustainability promises and actual implementation, which facilitate greenwashing.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).
In addition, Delmas and Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). point out that individual psychological factors can also contribute to the emergence of greenwashing. A narrow decision-making framework can lead to decisions being made in isolation, without sufficient consideration of the prerequisites for the actual implementation of communicated environmental performance.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).22Mütze, S. Corporate Social Responsibility und die Effekte nachhaltiger Unternehmenspraktiken und unterschiedlicher Greenwashing-Methoden auf die Unternehmensreputation. Junior Management Science 7, 826–873 (2022). At the same time, decision-makers may place greater weight on short-term economic benefits than on potential long-term reputational or sanction risks. An overly optimistic assessment of the likelihood of succeeding with misleading sustainability communication—or of not being detected—can further contribute to an underestimation of the risks of greenwashing.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).
In summary, the current state of research makes it clear that greenwashing can be attributed to a variety of external and internal organizational factors. Whether companies respond to external demands with actual sustainability measures or with misleading sustainability communication depends on their respective organizational conditions and the existing framework conditions.
2.4 Effects of greenwashing
Greenwashing has far-reaching consequences that affect various stakeholders and levels. In the academic literature, greenwashing is therefore understood not only as a communication problem, but as a phenomenon with significant economic, social, and environmental consequences.23Zioło, M., Bąk, I. & Spoz, A. Literature review of greenwashing research: State of the art. Corp Soc Responsibility Env 31, 5343–5356 (2024). These effects particularly affect consumers and companies and can also influence the functioning of sustainable markets and, consequently, environmental outcomes.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda. The following section first examines the effects of greenwashing on companies and then on consumers in greater detail.
2.4.1 Effects on companies
Through greenwashing, companies can benefit from a more positive perception of their purported sustainability performance, thereby improving their public image and meeting the expectations of various stakeholders.3Yang, Z., Huong, N. T. T., Nam, N. H., Nga, N. T. T. & Thanh, C. T. Greenwashing behaviours: Causes, taxonomy and consequences based on a systematic literature review. Journal of Business Economics and Management (JBEM) 21, 1486–1507 (2020).9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Since merely communicating environmental responsibility generally requires less time and money than actually implementing corresponding environmental measures, greenwashing can provide companies with short-term competitive advantages.3Yang, Z., Huong, N. T. T., Nam, N. H., Nga, N. T. T. & Thanh, C. T. Greenwashing behaviours: Causes, taxonomy and consequences based on a systematic literature review. Journal of Business Economics and Management (JBEM) 21, 1486–1507 (2020).24Seele, P. & Gatti, L. Greenwashing Revisited: In Search of a Typology and Accusation‐Based Definition Incorporating Legitimacy Strategies. Bus Strat Env 26, 239–252 (2017). However, current research indicates that these advantages are usually only temporary, and the negative effects outweigh them in the long term.25Roszkowska-Menkes, M. Greenwashing. in 1–6 (Springer, Cham, 2021). doi:10.1007/978-3-030-02006-4_390-1. Among the most frequently cited negative consequences are reputational damage and a loss of credibility among various stakeholder groups. If greenwashing is exposed, it can permanently damage a company’s reputation and negatively impact its competitive position.26Guo, R., Zhang, W., Wang, T., Li, C. B. & Tao, L. Timely or considered? Brand trust repair strategies and mechanism after greenwashing in China—from a legitimacy perspective. Industrial Marketing Management 72, 127–137 (2018).27Yu, E. P., Luu, B. V. & Chen, C. H. Greenwashing in environmental, social and governance disclosures. Research in international business and finance 52, 101192- (2020).
A recent example of this comes from the athletic apparel manufacturer Lululemon. In 2024, the environmental organization Stand.earth accused the company of using misleading sustainability claims as part of its “Be Planet” campaign. While Lululemon communicated ambitious climate goals, it simultaneously became apparent that the company’s greenhouse gas emissions had risen significantly between 2020 and 2022 and that a large portion of the materials used continued to consist of non-biodegradable polyester or nylon. Among other things, the allegations led to a complaint filed with the Canadian competition authority, calling for the campaign to be discontinued and for substantial financial penalties to be imposed. In addition, the company faced widespread public criticism, which further highlighted the risks to its reputation and brand image described above. This case demonstrates that the discrepancy between communicated sustainability goals and actual corporate practices can entail significant reputational and legal risks.28Wu, J. The Impact of Greenwashing on Corporate Performance in the Apparel Industry Under the Dual Carbon Policy: A Case Study of Lululemon. SHS Web Conf. 218, 04024 (2025).
In addition to its impact on reputation and business success, greenwashing can also harm relationships with investors. Santos et al. (2024)29Santos, C., Coelho, A. & Marques, A. A systematic literature review on greenwashing and its relationship to stakeholders: state of art and future research agenda. Manag Rev Q 74, 1397–1421 (2024). show that misleading sustainability reporting can reduce investors’ willingness to invest and damage a company’s brand image in the long term.30Dempere, J., Alamash, E. & Mattos, P. Unveiling the truth: greenwashing in sustainable finance. Front. Sustain. 5, (2024). Unlike actual sustainability benefits, greenwashing thus usually offers no lasting competitive advantage but instead jeopardizes a company’s long-term economic stability through negative market reactions.29Santos, C., Coelho, A. & Marques, A. A systematic literature review on greenwashing and its relationship to stakeholders: state of art and future research agenda. Manag Rev Q 74, 1397–1421 (2024). Furthermore, companies may face legal risks as a result of greenwashing. Delmas and Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). as well as Lyon and Montgomery (2015)9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). point out that misleading sustainability claims can lead to legal disputes in the form of lawsuits and fines, thereby causing additional economic burdens. At the same time, the negative consequences are not limited to the company directly affected. Santos et al. (2024)29Santos, C., Coelho, A. & Marques, A. A systematic literature review on greenwashing and its relationship to stakeholders: state of art and future research agenda. Manag Rev Q 74, 1397–1421 (2024). describe an industry spillover effect in which deception by a single company can undermine credibility and purchase intent toward an entire industry. This also creates competitive disadvantages for companies that actually operate sustainably, as greenwashing makes it more difficult to distinguish between credible sustainability performance and misleading environmental claims.9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Similarly, “out of concern for accusations of greenwashing, [some of these companies and brands] refrain from communicating their sustainability progress” (see Greenhushing, Chapter 3.1).31Tobias Biró & Dr. Andreas Neus. Greenwashing vs. Greenacting. NIM e.V. https://www.nim.org/studien/detail/greenwashing-vs-greenacting (2023). Yang et al. (2020)3Yang, Z., Huong, N. T. T., Nam, N. H., Nga, N. T. T. & Thanh, C. T. Greenwashing behaviours: Causes, taxonomy and consequences based on a systematic literature review. Journal of Business Economics and Management (JBEM) 21, 1486–1507 (2020). further point out that the consequences of greenwashing can also impair collaboration with external stakeholders by complicating existing partnerships or causing potential business partners to deliberately avoid collaboration.
Overall, greenwashing therefore offers no lasting competitive advantage but can significantly undermine a company’s long-term economic stability.29Santos, C., Coelho, A. & Marques, A. A systematic literature review on greenwashing and its relationship to stakeholders: state of art and future research agenda. Manag Rev Q 74, 1397–1421 (2024).]
2.4.2 Impact on consumers
“A company’s credibility is the most important guide for consumers [sic] when it comes to placing trust in sustainability promises.”31Tobias Biró & Dr. Andreas Neus. Greenwashing vs. Greenacting. NIM e.V. https://www.nim.org/studien/detail/greenwashing-vs-greenacting (2023).
A key starting point for analyzing the impact of greenwashing on consumers is the role of information and trust. In a broad-based survey, Biró & Neus (2023)31Tobias Biró & Dr. Andreas Neus. Greenwashing vs. Greenacting. NIM e.V. https://www.nim.org/studien/detail/greenwashing-vs-greenacting (2023). found that 70 percent of the more than 8,000 respondents viewed a company’s credibility as the basis for trusting its sustainability promises. That trust was further strengthened by the validation of these promises through “industry associations, NGOs, or government agencies” (p. 23).31Tobias Biró & Dr. Andreas Neus. Greenwashing vs. Greenacting. NIM e.V. https://www.nim.org/studien/detail/greenwashing-vs-greenacting (2023). If this trust is shaken by greenwashing, it has far-reaching consequences for the perception of the company as well as for consumer behavior.
As illustrated by the example of the sporting goods manufacturer Lululemon in the previous chapter, the exposure of greenwashing can permanently undermine consumer trust and negatively impact their purchasing behavior. Seven out of ten consumers report avoiding brands and companies accused of greenwashing.31Tobias Biró & Dr. Andreas Neus. Greenwashing vs. Greenacting. NIM e.V. https://www.nim.org/studien/detail/greenwashing-vs-greenacting (2023).
Another effect of greenwashing is that consumers are increasingly overwhelmed by information. Ambiguous or misleading sustainability claims make it difficult to objectively assess the actual environmental performance of products and companies. As a result, it is becoming increasingly difficult to distinguish between credible sustainability achievements and misleading environmental claims.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Chen and Chang (2013)19Chen, Y.-S. & Chang, C.-H. Greenwash and Green Trust: The Mediation Effects of Green Consumer Confusion and Green Perceived Risk. J Bus Ethics 114, 489–500 (2013). refer to this phenomenon as “green consumer confusion” and demonstrate that greenwashing leads to greater uncertainty among consumers regarding the credibility of environmental claims. As a result of these information asymmetries, there is also a risk that sustainability promises will either be accepted uncritically or fundamentally questioned, thereby making it more difficult to make informed purchasing decisions.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).19Chen, Y.-S. & Chang, C.-H. Greenwash and Green Trust: The Mediation Effects of Green Consumer Confusion and Green Perceived Risk. J Bus Ethics 114, 489–500 (2013).
At the same time, the difficulty in interpreting sustainability information increases the perceived risk of making the wrong decisions when purchasing sustainable products. Consumers are often unable to reliably assess whether advertised environmental benefits actually exist, which further erodes trust in such sustainability promises.19Chen, Y.-S. & Chang, C.-H. Greenwash and Green Trust: The Mediation Effects of Green Consumer Confusion and Green Perceived Risk. J Bus Ethics 114, 489–500 (2013).
In the long term, this trend can lead to a general distrust of sustainability communication. In the scientific literature, this phenomenon is often described as “green skepticism.” This growing skepticism makes it harder for consumers to identify truly sustainable products and services, and can thereby reduce interest in sustainable consumption overall.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246.9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). At the same time, companies that credibly communicate their sustainability performance are at a disadvantage, as greenwashing weakens trust in environmental and sustainability claims across the board.9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015).
2.5 Approaches to preventing greenwashing in the literature
Preventing greenwashing requires measures that go beyond individual companies and are influenced by external actors and institutional frameworks. These include, in particular, transparent and verifiable sustainability communication, regulatory and institutional measures, and consumer-oriented approaches, which are highlighted by authors such as Platschke (2022)32Platschke, K. Das Anti-Greenwashing-Buch: Eine Schritt-für-Schritt-Anleitung für ehrliche Nachhaltigkeit in Unternehmen. (Springer Fachmedien Wiesbaden, Wiesbaden, 2022). doi:10.1007/978-3-658-38067-0., Kirchhoff (2000)33Kirchhoff, S. Green Business and Blue Angels. Environmental and Resource Economics 15, 403–420 (2000)., and Delmas & Burbano (2011)2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). as key preventive tools. Together, these approaches aim to reduce information asymmetries, increase the credibility of sustainability claims, and identify or prevent misleading environmental and sustainability communication at an early stage. The following subsections systematically present these external prevention approaches.
2.5.1 Transparency and verification of sustainability claims
In the academic literature, the transparency and verifiability of sustainability claims are regarded as key prerequisites for preventing greenwashing.32Platschke, K. Das Anti-Greenwashing-Buch: Eine Schritt-für-Schritt-Anleitung für ehrliche Nachhaltigkeit in Unternehmen. (Springer Fachmedien Wiesbaden, Wiesbaden, 2022). doi:10.1007/978-3-658-38067-0. Since consumers and other stakeholders often have only limited ability to verify the environmental characteristics of products or corporate activities, information asymmetries arise that can facilitate misleading sustainability communication.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).33Kirchhoff, S. Green Business and Blue Angels. Environmental and Resource Economics 15, 403–420 (2000). To reduce these information asymmetries, transparent and traceable sustainability communication is therefore highlighted as an essential preventive approach.34Markham, D., Khare, A. & Beckman, T. Greenwashing: A Proposal to Restrict Its Spread. Journal of Environmental Assessment Policy and Management 16, 1–16 (2014).35Lopes, J. M., Gomes, S. & Trancoso, T. The Dark Side of Green Marketing: How Greenwashing Affects Circular Consumption? Sustainability 15, 11649 (2023).
Against this backdrop, the literature specifically cites environmental labels and certifications as suitable tools for improving the credibility and traceability of sustainability claims.33Kirchhoff, S. Green Business and Blue Angels. Environmental and Resource Economics 15, 403–420 (2000). Examples include the Blue Angel as a German environmental label and the EU Ecolabel as a European environmental label. Both are based on transparent and scientifically sound environmental criteria and are intended to provide consumers with reliable guidance for sustainable purchasing decisions.36Umweltbundesamt. Umweltzeichen. https://www.umweltbundesamt.de/themen/chemikalien/wasch-reinigungsmittel/umweltzeichen (2021).37Nygaard, A. & Silkoset, R. Sustainable development and greenwashing: How blockchain technology information can empower green consumers. Business Strategy and the Environment 32, 3801–3813 (2023).
Kirchhoff (2000)33Kirchhoff, S. Green Business and Blue Angels. Environmental and Resource Economics 15, 403–420 (2000). distinguishes between endogenous and exogenous environmental labels. Endogenous environmental labels are awarded by the companies themselves and take the form, for example, of self-declared environmental claims. Exogenous environmental labels, on the other hand, are awarded by independent certification or labeling bodies. Their credibility rests in particular on clearly defined award criteria as well as corresponding control and monitoring mechanisms that ensure compliance with these standards.33Kirchhoff, S. Green Business and Blue Angels. Environmental and Resource Economics 15, 403–420 (2000).
At the same time, the literature points out that environmental labels and certifications do not guarantee unrestricted protection against greenwashing. Lyon & Montgomery (2015)9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). emphasize that while certifications generally have the potential to limit greenwashing, they are not themselves immune to misuse. Under certain circumstances, environmental labels can therefore be perceived as forms of greenwashing themselves or even contribute to legitimizing misleading sustainability communications.9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Overall, the literature shows that environmental labels and certifications can only make an effective contribution to preventing greenwashing if they are based on transparent criteria and the communicated sustainability performance is substantiated by verifiable evidence.34Markham, D., Khare, A. & Beckman, T. Greenwashing: A Proposal to Restrict Its Spread. Journal of Environmental Assessment Policy and Management 16, 1–16 (2014).
2.5.2 Regulatory and institutional measures
Regulatory and institutional measures are considered key approaches to curbing greenwashing in the academic literature. Legal requirements and regulatory frameworks are intended to oblige companies to communicate transparently and truthfully about sustainability and to protect consumers from misleading environmental and sustainability claims.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). As greenwashing has become more widespread, existing regulations have been gradually refined. While early regulatory approaches primarily consisted of general provisions against misleading advertising, current regulatory measures are increasingly focused specifically on environmental claims and their verifiability.34Markham, D., Khare, A. & Beckman, T. Greenwashing: A Proposal to Restrict Its Spread. Journal of Environmental Assessment Policy and Management 16, 1–16 (2014).
The legal foundation for regulating manipulative environmental advertising in the U.S. was the Federal Trade Commission Act (FTC Act), enacted in 1914, which prohibits deceptive business practices and thus forms the central federal legal framework for combating such advertising claims.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).38Gibson, D. Awash in Green: A Critical Perspective on Environmental Advertising. Tulane Environmental Law Journal 22, 423–440 (2009).
However, as environmental advertising claims became more widespread and complex, the general provisions of the FTC Act increasingly proved insufficient to provide companies with reliable guidance on how to handle environmental claims. Against this backdrop, the Federal Trade Commission published the so-called Green Guides in 1992. These guidelines clarified the application of the FTC Act to environmental advertising claims and were intended to help companies formulate environmental and sustainability claims transparently.38Gibson, D. Awash in Green: A Critical Perspective on Environmental Advertising. Tulane Environmental Law Journal 22, 423–440 (2009). Markham et al. (2014)34Markham, D., Khare, A. & Beckman, T. Greenwashing: A Proposal to Restrict Its Spread. Journal of Environmental Assessment Policy and Management 16, 1–16 (2014). point out, however, that the effectiveness of these early regulatory measures was limited despite their preventive nature, as consistent enforcement against greenwashing was often lacking.
The limited effectiveness of these measures highlighted the need for more specific regulations to combat greenwashing. While environmental advertising claims initially fell predominantly under general consumer protection laws, the increasing prevalence of environmental and sustainability claims revealed that these laws were insufficient to meet the specific requirements of such claims. In particular, there was a lack of uniform requirements regarding the justification, verifiability, and comparability of environmental claims. Against this backdrop, the European Union has purposefully refined its regulatory strategy in recent years and created new legislative initiatives specifically aimed at preventing misleading environmental and sustainability claims.34Markham, D., Khare, A. & Beckman, T. Greenwashing: A Proposal to Restrict Its Spread. Journal of Environmental Assessment Policy and Management 16, 1–16 (2014).39Carreño, I. To Address “Greenwashing” and Misleading Environmental Claims, the European Commission Publishes a Proposal on “Green Claims” and Their Substantiation. European Journal of Risk Regulation 14, 607–611 (2023).
A major milestone in European regulation of greenwashing is the EU Directive (EU) 2024/82540Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 Amending Directives 2005/29/EC and 2011/83/EU as Regards Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and through Better Information (Text with EEA Relevance). (2024)., hereinafter referred to as the EmpCo Directive (Empowering Consumers for the Green Transition). It was adopted by the European Parliament and the Council of the European Union on February 28, 2024, and entered into force on March 26, 2024. Member States are required to transpose the provisions of the directive into national law by March 27, 2026; the new regulations must be applied in a binding manner as of September 27, 2026. The objective of the Directive is to “introduce specific provisions into Union consumer law to combat unfair commercial practices that mislead consumers and prevent them from making sustainable consumption choices, such as practices related to the premature obsolescence of goods and misleading environmental claims, misleading information about the social characteristics of products or the business activities of traders, or non-transparent and non-credible sustainability labels.”40Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 Amending Directives 2005/29/EC and 2011/83/EU as Regards Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and through Better Information (Text with EEA Relevance). (2024).
The Empowering Consumers for the Green Transition Directive (EmpCo Directive) significantly strengthens the requirements for environmental and sustainability-related advertising claims. In the future, broad environmental claims such as “environmentally friendly,” “green,” or “climate-friendly” will generally be prohibited unless companies can substantiate such claims with demonstrable and verifiable environmental performance. Furthermore, claims regarding future environmental performance, such as achieving climate neutrality or carbon neutrality, may only be used if they are based on clear, objective, and publicly accessible commitments, supported by a realistic implementation plan with measurable interim targets, and regularly verified by an independent expert body.
In addition, the Directive prohibits sustainability labels unless they are based on a recognized certification scheme or have been established by a public authority.40Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 Amending Directives 2005/29/EC and 2011/83/EU as Regards Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and through Better Information (Text with EEA Relevance). (2024).41Oldeland, M. Nachhaltigkeitskommunikation im Regelungsnebel: Green Claims und EmpCo. ÖW 40, 11 (2025). To ensure compliance with these requirements, European consumer law provides for effective enforcement mechanisms. Violations of the environmental and sustainability claim requirements strengthened by the EmpCo Directive can be pursued under the existing European sanctions framework. In cases of widespread infringements with an EU-wide dimension, Member States are required to provide for financial penalties. The statutory penalty framework must allow for a maximum fine of at least four percent of the annual turnover of the responsible company in the Member States concerned.42Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 Amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as Regards the Better Enforcement and Modernisation of Union Consumer Protection Rules (Text with EEA Relevance). OJ L vol. 328 (2019). Consequently, the existing European enforcement mechanisms will also apply to violations of the stricter requirements introduced by the EmpCo Directive.40Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 Amending Directives 2005/29/EC and 2011/83/EU as Regards Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and through Better Information (Text with EEA Relevance). (2024).
Overall, the development of regulatory measures demonstrates that limiting greenwashing cannot be achieved through general advertising regulations alone. Only specific requirements regarding the transparency and substantiation of environmental and sustainability claims, combined with effective enforcement mechanisms, can alter the economic incentives facing companies. Without consistent enforcement, companies may continue to gain competitive advantages from misleading environmental and sustainability claims without actually implementing corresponding measures. Regulatory requirements and effective sanctions, by contrast, increase the costs of misleading sustainability communications and create incentives for credible and transparent sustainability reporting and communication.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).34Markham, D., Khare, A. & Beckman, T. Greenwashing: A Proposal to Restrict Its Spread. Journal of Environmental Assessment Policy and Management 16, 1–16 (2014).40Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 Amending Directives 2005/29/EC and 2011/83/EU as Regards Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and through Better Information (Text with EEA Relevance). (2024).
2.5.3 Consumer-oriented prevention approaches
Consumer-oriented prevention approaches aim to support consumers in identifying misleading sustainability claims. According to Nygaard and Silkoset (2022)37Nygaard, A. & Silkoset, R. Sustainable development and greenwashing: How blockchain technology information can empower green consumers. Business Strategy and the Environment 32, 3801–3813 (2023)., this primarily requires access to trustworthy, transparent, and verifiable sustainability information. Such information enables consumers to assess environmental and sustainability-related claims more critically and to better evaluate their credibility.
The increasing prevalence of sustainability and corporate social responsibility (CSR) communication often makes it difficult to distinguish genuinely sustainable companies from those that exaggerate or misrepresent their environmental performance.43Parguel, B., Benoît-Moreau, F. & Larceneux, F. How Sustainability Ratings Might Deter ‘Greenwashing’: A Closer Look at Ethical Corporate Communication. J Bus Ethics 102, 15–28 (2011). Against this backdrop, independent sustainability ratings can provide valuable guidance by assessing sustainability performance from an external perspective and facilitating its interpretation. In addition, the literature emphasizes the importance of information and awareness campaigns. Lopes et al. (2023)35Lopes, J. M., Gomes, S. & Trancoso, T. The Dark Side of Green Marketing: How Greenwashing Affects Circular Consumption? Sustainability 15, 11649 (2023). argue that such initiatives can raise consumer awareness of greenwashing and improve access to relevant sustainability information.
An important contribution in this regard was made by TerraChoice’s (2010)14Terrachoice Environmental Marketing Inc. The Sins of Greenwashing. https://www.twosides.info/wp-content/uploads/2018/05/Terrachoice_The_Sins_of_Greenwashing_-_Home_and_Family_Edition_2010.pdf (2010). report The Seven Sins of Greenwashing which was discussed in detail in Chapter 3.2.1. The report systematically outlines common forms of misleading environmental communication and thus provides useful criteria for identifying problematic environmental claims. Non-governmental organizations (NGOs) also contribute to consumer education by providing independent information and publicly exposing misleading environmental communications.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).
Furthermore, Lyon and Montgomery (2015)9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). demonstrate that social media, in particular, facilitates the rapid dissemination of such information, thereby increasing both public awareness of greenwashing and pressure on companies to address it.
2.6 Critical assessment of the current state of research and research gaps
Academic research on greenwashing has gained considerable importance in recent years. As the number of scientific publications has increased, the thematic focus of research has continuously expanded as well.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246.44Forliano, C., Battisti, E., De Bernardi, P. & Kliestik, T. Mapping the greenwashing research landscape: a theoretical and field analysis. Rev Manag Sci 19, 3407–3456 (2025). Greenwashing is no longer examined solely within the context of marketing and communications; it increasingly encompasses issues related to sustainability management, corporate governance, finance, and legal studies.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246. At the same time, recent review studies indicate that the field is characterized by substantial thematic diversity and a variety of theoretical perspectives. Existing literature reviews frequently focus on specific dimensions of the greenwashing phenomenon and examine it from different disciplinary viewpoints.23Zioło, M., Bąk, I. & Spoz, A. Literature review of greenwashing research: State of the art. Corp Soc Responsibility Env 31, 5343–5356 (2024).
Despite the significant expansion of the field, current greenwashing research remains concentrated on certain subject areas. A large proportion of studies primarily investigates the effects of misleading sustainability communication on consumers, particularly with regard to trust, brand perceptions, and purchasing behavior.29Santos, C., Coelho, A. & Marques, A. A systematic literature review on greenwashing and its relationship to stakeholders: state of art and future research agenda. Manag Rev Q 74, 1397–1421 (2024). In contrast, internal organizational issues—such as governance structures, decision-making processes, compliance systems, and sustainability management practices—have received comparatively limited attention.44Forliano, C., Battisti, E., De Bernardi, P. & Kliestik, T. Mapping the greenwashing research landscape: a theoretical and field analysis. Rev Manag Sci 19, 3407–3456 (2025). As a result, research has thus far been dominated by an external perspective on greenwashing. While internal organizational drivers and management approaches to prevention are increasingly being examined, they continue to occupy a considerably smaller role within the existing body of literature.5Gatti, L., Conti, L. G. & Seele, P. A Comprehensive Guide to Greenwashing Phenomena, Contexts, and Trends: The Mean, Lean Washing Machine. (Edward Elgar Publishing, 2025). doi:10.4337/9781035328246.44Forliano, C., Battisti, E., De Bernardi, P. & Kliestik, T. Mapping the greenwashing research landscape: a theoretical and field analysis. Rev Manag Sci 19, 3407–3456 (2025).
The review of the scientific literature demonstrates that greenwashing cannot be attributed to a single cause. Rather, the phenomenon emerges through the interaction of economic incentives, existing information asymmetries, organizational factors, and the regulatory environment.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015). Accordingly, the analysis of prevention approaches also indicates that no single measure can fully prevent greenwashing. Transparency and reporting standards, environmental labels and certifications, regulatory measures, and consumer-oriented approaches each address different causes and dimensions of the phenomenon. The literature therefore suggests that their effectiveness depends largely on their coordinated implementation. Only a combination of organizational, communicative, and regulatory instruments can make a meaningful contribution to reducing misleading sustainability communication.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).34Markham, D., Khare, A. & Beckman, T. Greenwashing: A Proposal to Restrict Its Spread. Journal of Environmental Assessment Policy and Management 16, 1–16 (2014).35Lopes, J. M., Gomes, S. & Trancoso, T. The Dark Side of Green Marketing: How Greenwashing Affects Circular Consumption? Sustainability 15, 11649 (2023).
This implies that preventing greenwashing should not be viewed solely as a communication-related challenge. Instead, it requires a stronger integration of credible sustainability practices into internal organizational structures, decision-making processes, and control mechanisms. Against this backdrop, the following chapter focuses on the practical implications and recommendations for preventing greenwashing within organizations.
3 Practical implications and recommendations for companies to prevent greenwashing
Building on the findings of the literature review, the following section derives practical recommendations for companies seeking to avoid greenwashing. While Chapter 3.5 primarily examined external prevention approaches, including regulatory, institutional, and consumer-oriented measures, the focus of this chapter is on internal organizational actions. The objective is to develop a practical management framework for preventing greenwashing based on the insights gained from the preceding analysis.
3.1 Greenwashing as a structural management problem
Greenwashing suggests that, in many organizations, sustainability is not systematically embedded in day-to-day business operations but instead remains largely confined to the level of corporate communication.45Kraft, M. H. G., Ivancic, R. & Nertinger, S. Greenwashing: Wirkungsvolle Ansätze zur Identifikation und Vermeidung. (Springer Fachmedien Wiesbaden, Wiesbaden, 2024). doi:10.1007/978-3-658-44744-1. A key driver of this behavior is the presence of incentive structures that reward managers for achieving marketing or public relations objectives.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). Such short-term incentives can encourage opportunistic behavior, as management seeks to benefit from a positive sustainability image without bearing the investment costs required to achieve genuine environmental or social improvements.45Kraft, M. H. G., Ivancic, R. & Nertinger, S. Greenwashing: Wirkungsvolle Ansätze zur Identifikation und Vermeidung. (Springer Fachmedien Wiesbaden, Wiesbaden, 2024). doi:10.1007/978-3-658-44744-1.
In addition to flawed incentive systems, inadequate coordination between departments such as marketing and operations may lead to unintended greenwashing.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). Senior leadership plays a critical role in this context, as a lack of commitment and role-model behavior from top management can undermine the strategic integration of sustainability throughout the organization.45Kraft, M. H. G., Ivancic, R. & Nertinger, S. Greenwashing: Wirkungsvolle Ansätze zur Identifikation und Vermeidung. (Springer Fachmedien Wiesbaden, Wiesbaden, 2024). doi:10.1007/978-3-658-44744-1. When organizations lack a culture that encourages internal criticism and open discussion of shortcomings, sustainability initiatives risk becoming largely symbolic in nature.8Laufer, W. S. Social Accountability and Corporate Greenwashing. Journal of Business Ethics 43, 253–261 (2003).45Kraft, M. H. G., Ivancic, R. & Nertinger, S. Greenwashing: Wirkungsvolle Ansätze zur Identifikation und Vermeidung. (Springer Fachmedien Wiesbaden, Wiesbaden, 2024). doi:10.1007/978-3-658-44744-1. Within such environments, greenwashing often serves to conceal the gap between actual corporate practices and their public representation.8Laufer, W. S. Social Accountability and Corporate Greenwashing. Journal of Business Ethics 43, 253–261 (2003).9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015).
The underlying management challenge, therefore, lies in the misuse of sustainability as a reputation-management tool rather than treating it as a core organizational capability that is integrated across all levels of the company. These structural deficiencies highlight the need for the systematic prevention processes discussed in the following chapter.
3.2 Recommendations for implementing greenwashing prevention
Preventing greenwashing within an organization requires a systematic approach, as isolated communication measures alone are insufficient to ensure credible sustainability communication over the long term. The following section presents practical recommendations to help organizations avoid greenwashing. These recommendations are based on key areas of effective sustainability management and build upon one another conceptually. First, it outlines how sustainability can be strategically embedded within the organization. It then discusses measures for the systematic assessment and evaluation of sustainability performance, followed by requirements for transparent and credible sustainability communication. Finally, it highlights how institutional frameworks can support practical implementation.
3.2.1 Embedding sustainability strategically
A credible sustainability strategy requires that environmental objectives be understood as an integral part of corporate strategy and incorporated into key decision-making and business processes.32Platschke, K. Das Anti-Greenwashing-Buch: Eine Schritt-für-Schritt-Anleitung für ehrliche Nachhaltigkeit in Unternehmen. (Springer Fachmedien Wiesbaden, Wiesbaden, 2022). doi:10.1007/978-3-658-38067-0. Responsibility for sustainability should be embedded within the organization itself rather than being delegated exclusively to external consultants or communication agencies.32Platschke, K. Das Anti-Greenwashing-Buch: Eine Schritt-für-Schritt-Anleitung für ehrliche Nachhaltigkeit in Unternehmen. (Springer Fachmedien Wiesbaden, Wiesbaden, 2022). doi:10.1007/978-3-658-38067-0. Only when sustainability is recognized as a shared organizational objective can it be implemented consistently over the long term and communicated credibly to external stakeholders.
In addition, clear responsibilities for sustainability should be established and integrated throughout the organization. This may include the appointment of sustainability officers or the creation of cross-functional coordination structures that ensure the consistent exchange of information among management, procurement, operations, and marketing, and ensure that sustainability objectives are considered across all business functions.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).45Kraft, M. H. G., Ivancic, R. & Nertinger, S. Greenwashing: Wirkungsvolle Ansätze zur Identifikation und Vermeidung. (Springer Fachmedien Wiesbaden, Wiesbaden, 2024). doi:10.1007/978-3-658-44744-1. It is equally important to involve employees in change processes at an early stage and to avoid limiting responsibility for sustainability to specific departments. This helps to create a shared understanding of sustainability goals and supports their implementation throughout the organization.32Platschke, K. Das Anti-Greenwashing-Buch: Eine Schritt-für-Schritt-Anleitung für ehrliche Nachhaltigkeit in Unternehmen. (Springer Fachmedien Wiesbaden, Wiesbaden, 2022). doi:10.1007/978-3-658-38067-0.46Haug, H. Nachhaltigkeit und Kommunikation: Es geht um Wirkung: Für Unternehmen und die Gesellschaft. in Wirkungsvolle Nachhaltigkeitskommunikation 49–67 (Springer Fachmedien Wiesbaden, Wiesbaden, 2024). doi:10.1007/978-3-658-45227-8_4.
To reduce the risk of greenwashing, organizations should design performance evaluation and incentive systems in a way that rewards not only short-term marketing or communication successes but also the actual achievement of sustainability objectives.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). Furthermore, the involvement of relevant stakeholders—including employees, suppliers, and external stakeholder groups—can help continuously evaluate sustainability initiatives and identify potential inconsistencies at an early stage.32Platschke, K. Das Anti-Greenwashing-Buch: Eine Schritt-für-Schritt-Anleitung für ehrliche Nachhaltigkeit in Unternehmen. (Springer Fachmedien Wiesbaden, Wiesbaden, 2022). doi:10.1007/978-3-658-38067-0. Through clearly defined responsibilities and cross-functional collaboration, sustainability can evolve from an isolated communication activity into a core element of corporate governance and management.
3.2.2 Systematically measuring and evaluating sustainability performance
A credible sustainability strategy requires a comprehensive assessment that goes beyond the company itself and critically examines the entire value chain. A key objective is to identify previously unrecognized sustainability deficiencies or risks within the value chain at an early stage, before any external communication takes place. To avoid selective perception, this process should also incorporate external stakeholder perspectives, as these facilitate alignment between the organization’s internal view and broader societal expectations.32Platschke, K. Das Anti-Greenwashing-Buch: Eine Schritt-für-Schritt-Anleitung für ehrliche Nachhaltigkeit in Unternehmen. (Springer Fachmedien Wiesbaden, Wiesbaden, 2022). doi:10.1007/978-3-658-38067-0.
The next step is to conduct a systematic comparison between actual sustainability performance and the sustainability claims communicated by the organization. While communicated sustainability performance is based on publicly disclosed sustainability statements, actual sustainability performance should be assessed using objectively verifiable indicators, such as validated emissions data and other environmental performance metrics.47Dorfleitner, G. & Utz, S. Green, green, it’s green they say: a conceptual framework for measuring greenwashing on firm level. Review of Managerial Science 18, 3463–3486 (2024).
Recent research further demonstrates that potential discrepancies between sustainability communication and actual performance can increasingly be analyzed using data-driven approaches. For example, published sustainability reports can be systematically evaluated through computer-assisted text analysis to identify potential indicators of greenwashing.48Lublóy, Á., Keresztúri, J. L. & Berlinger, E. Quantifying firm-level greenwashing: A systematic literature review. Journal of environmental management 373, 123399- (2025). Such methods make it possible to assess whether communicated claims are consistent with demonstrable sustainability performance or whether signs of greenwashing are present.
This type of systematic evaluation provides a robust foundation for credible sustainability communication and helps organizations identify greenwashing risks within their value chains at an early stage.
3.2.3 Using institutional frameworks: Standards, labels, and regulatory requirements
The use of established reporting standards represents an effective instrument for reducing information asymmetries between companies and their stakeholders. Empirical studies suggest that organizations aligning their sustainability reporting with the internationally recognized standards of the Global Reporting Initiative (GRI) are less likely to engage in greenwashing than companies that do not follow such reporting frameworks.49Ruiz-Blanco, S., Romero, S. & Fernandez-Feijoo, B. Green, blue or black, but washing–What company characteristics determine greenwashing? Environ Dev Sustain 24, 4024–4045 (2022). Standardized reporting mechanisms, including the German Sustainability Code (DNK), can help make discrepancies between communicated sustainability performance and a company’s actual environmental performance measurable.49Ruiz-Blanco, S., Romero, S. & Fernandez-Feijoo, B. Green, blue or black, but washing–What company characteristics determine greenwashing? Environ Dev Sustain 24, 4024–4045 (2022). Particularly in environmentally sensitive industries, these frameworks assist organizations in meeting the growing transparency expectations of their stakeholders.49Ruiz-Blanco, S., Romero, S. & Fernandez-Feijoo, B. Green, blue or black, but washing–What company characteristics determine greenwashing? Environ Dev Sustain 24, 4024–4045 (2022).
The application of such standards enhances both the quality and verifiability of disclosed information. As a result, it becomes more difficult for companies to emphasize sustainability initiatives in their communications without substantiating them through genuinely implemented environmental measures.49Ruiz-Blanco, S., Romero, S. & Fernandez-Feijoo, B. Green, blue or black, but washing–What company characteristics determine greenwashing? Environ Dev Sustain 24, 4024–4045 (2022). In addition, recognized sustainability labels and certification schemes can strengthen the credibility of sustainability communications. However, as discussed previously (see Section 3.5.1), this is only the case when transparent and independently verifiable labeling systems are used. Companies should therefore prioritize established certification schemes and avoid relying on self-created or non-transparent environmental labels.50MacLennan, J. & Catelle, W. D. The Revision of EU Greenwashing Laws: A New Framework of Analysis. Business and Human Rights Journal 10, 456–462 (2025).
Building on the regulatory developments outlined in Section 3.5.2, organizations should also proactively align their sustainability communications with the requirements of the EmpCo Directive. From a practical business perspective, this primarily means ensuring that environmental and sustainability-related claims are reviewed from both a legal and technical perspective before publication, while internal processes are designed to provide the required evidence and documentation whenever needed.40Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 Amending Directives 2005/29/EC and 2011/83/EU as Regards Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and through Better Information (Text with EEA Relevance). (2024).
Future-oriented sustainability commitments should furthermore be supported by a transparent implementation plan and regular verification by independent third parties.50MacLennan, J. & Catelle, W. D. The Revision of EU Greenwashing Laws: A New Framework of Analysis. Business and Human Rights Journal 10, 456–462 (2025). The growing role of external assurance is consistent with the broader regulatory developments associated with the European Green Deal. Similar requirements already exist under the Corporate Sustainability Reporting Directive (CSRD), which obliges companies to provide standardized and auditable sustainability reporting.50MacLennan, J. & Catelle, W. D. The Revision of EU Greenwashing Laws: A New Framework of Analysis. Business and Human Rights Journal 10, 456–462 (2025). Consequently, organizations should ensure that their sustainability communications are based on robust and, wherever possible, externally validated data before publication. In addition, they should establish appropriate internal control and verification processes to prevent unsubstantiated or misleading sustainability claims.
3.3 Critical evaluation and implementation barriers to greenwashing prevention
The implementation of effective measures against greenwashing often encounters economic trade-offs in management practice. The high costs associated with implementing genuine sustainability initiatives, as well as complex certification and reporting processes, can place a significant burden on organizations with limited financial resources.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011). For these companies in particular, the investments required to implement actual sustainability improvements and comply with certification and reporting requirements may constitute a substantial financial obstacle. At the same time, economic incentives may lead organizations to perceive the costs of implementing real sustainability measures as exceeding the potential consequences of misleading sustainability communications, thereby limiting the preventive effect of governmental or private monitoring mechanisms.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).
In addition to these financial considerations, organizational barriers can hinder credible sustainability communication. Inadequate internal communication processes and insufficient coordination among marketing, product development, and other business functions may result in sustainability claims that are not adequately aligned with actual organizational practices. Furthermore, when employees are evaluated primarily on the basis of short-term marketing objectives without sufficient consideration of the factual accuracy and substantiation of their sustainability claims, the risk of unintended or exaggerated environmental statements increases.2Delmas, M. A. & Burbano, V. C. The Drivers of Greenwashing. California Management Review 54, 64–87 (2011).
At the market level, the effectiveness of transparency mechanisms is further constrained by growing information overload. The large number of environmental, social, and governance (ESG) claims, combined with inconsistent sustainability ratings, makes it increasingly difficult for stakeholders to assess companies’ actual sustainability performance objectively.4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda.9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015).
Another potential consequence of stricter monitoring and enforcement mechanisms is greenhushing, a phenomenon already discussed in Chapter 3.1. By reducing their sustainability communications, organizations may limit the flow of information regarding genuinely achieved sustainability progress.4Montgomery, A. W., Lyon, T. P. & Barg, J. No End in Sight? A Greenwash Review and Research Agenda.9Lyon, T. P. & Montgomery, A. W. The Means and End of Greenwash. Organization & environment 28, 223–249 (2015).
Overall, these challenges demonstrate that preventing greenwashing remains a complex and long-term management task despite the availability of various preventive measures. The effectiveness of individual initiatives depends largely on their consistent integration into organizational structures, continuous monitoring, and support through a credible sustainability culture. Ultimately, only the combined effect of transparent sustainability communication, effective control and verification mechanisms, and a genuinely embedded culture of sustainability can contribute to reducing the risk of greenwashing in the long term.
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