Greenwashing: Definition, Examples, Consequences, and How Companies Can Avoid It
Greenwashing makes companies, products, or services appear more environmentally friendly than is supported by reliable facts and evidence. This article explains how to recognize greenwashing, what the potential consequences are, and what companies need to keep in mind when making environmental claims—including in light of the rules that will take effect on September 27, 2026.
Greenwashing: The Key Points at a Glance
- Greenwashing results from misleading, unsubstantiated, vague, or selective statements about the environment and sustainability. It does not necessarily require a deliberate lie.
- Typical examples include broad terms such as “green,” the highlighting of individual positive aspects, vague comparisons, sustainability labels that lack government regulation or a transparent certification system, and certain product-related claims that are based solely on offsetting.
- Greenwashing can damage trust, trigger competitive disputes, and increase internal risks when marketing, sustainability management, and compliance teams rely on different data.
- In Germany, stricter requirements for environmental claims, sustainability labels, future commitments, and certain product-related climate claims will take effect on September 27, 2026.
- Companies can reduce risks by specifying claims, documenting supporting evidence, and establishing binding approval processes.
What is greenwashing?
Greenwashing refers to environmental or sustainability communication that makes a company, product, or service appear more environmentally friendly than its actual performance and verifiable evidence warrant. This can be achieved through false statements. More commonly, however, it involves vague terminology, a lack of evidence, omitted information, or the extrapolation of a single positive aspect to the overall picture.
“Greenwashing” is not a separate legal offense in and of itself. Rather, from a legal perspective, it must be determined whether the specific business practice is misleading or otherwise unfair under the applicable regulations.
Here’s a simple example: A package is made of 80 percent recycled material. If the company therefore promotes the entire product as “environmentally friendly” across the board, it remains unclear what the statement refers to and what the remaining environmental impacts are. The specific statement about the packaging may be accurate, but the overall impression it creates can still be misleading.
Credible sustainability communication therefore makes it clear that:
- what a statement refers to,
- the method used to determine it,
- what time period and what benchmark apply,
- what the limitations of the statement are and
- what evidence it is based on.
Greenwashing should not be confused with greenhushing. Greenhushing refers to companies that, out of concern for criticism or legal risks, either fail to communicate their existing environmental achievements at all or do so only very cautiously. The sustainable middle ground lies in concrete, transparent, and verifiable communication.
What types of greenwashing are there?
Greenwashing takes many forms. What matters is not just whether a statement is literally false. Context, presentation, the point of reference, and omitted information also influence the overall impression.
1. Vague statements about the environment
Terms such as “green,” “environmentally friendly,” “ecological,” or “sustainable” remain unclear without further explanation. They do not specify which environmental aspect is being referred to, nor how performance was measured.
Example: A product is advertised as “environmentally friendly” without providing any information about its materials, manufacturing, use, or disposal.
2. Missing supporting documents
An environmental claim is made but is not supported by verifiable data, a transparent methodology, or appropriate testing.
Example: A supplier promises “30 percent less CO₂,” but does not specify the baseline, the time period under consideration, or the product life cycle.
3. Selective Presentation
A positive aspect is strongly emphasized, while significant negative consequences are left unmentioned. This practice is also known as “cherry-picking.”
Example: An advertisement focuses on recyclable packaging, even though the message says nothing about the environmental impact of the product inside.
4. Misleading Extrapolation to the Overall Product
A verifiable characteristic of a component is linguistically attributed to the entire product or company.
Example: Only the lid is made of recycled plastic. However, the advertisement gives the impression that the entire package is recycled.
5. Unclear or inappropriate comparisons
Comparisons require a uniform basis. Without one, it remains unclear whether like things are actually being compared with like things.
Example: “More climate-friendly than before” does not specify the base year, the calculation method, or the emissions taken into account.
6. Misleading sustainability labels
Self-created labels can appear to be independent certifications, even though the criteria, verification procedures, and the responsible body are not transparent.
Example: A green logo with the word “verified” is used without explaining who verified what or according to what criteria.
7. Promises for the future without a solid plan
Goals such as “climate neutral by 2035” have a tangible impact. Legally, statements about future environmental performance must be based on clear, objective, publicly accessible, and verifiable commitments that are set out in a detailed and realistic implementation plan. Milestones, clear lines of responsibility, sufficient resources, and regular progress reviews are key elements of robust implementation and sound business practice.
How can you spot greenwashing?
A single green design element does not necessarily indicate greenwashing. However, when several warning signs appear together, it suggests that a claim should be examined more closely:
- The tagline uses general terms without directly explaining them.
- A reference point, time period, or benchmark is missing.
- Figures are cited, but the method of calculation remains unclear.
- A specific aspect is applied to the entire product or company.
- The evidence cannot be found, is outdated, or does not apply to the specific statement.
- A seal looks official, but the criteria and the certifying body are not transparent.
- Future goals do not include any intermediate goals or a clear implementation plan.
- Marketing statements contradict published sustainability data.
The following comparison shows how general statements can be made more specific:
The wording in the middle column is provided as examples only and does not constitute a blanket legal approval. Whether a claim is permissible depends on the specific product, medium, context, and supporting evidence.
What are the consequences of greenwashing for companies?
Greenwashing is more than just a communication mistake. It can have legal, economic, and organizational consequences.
Legal and Competitive Risks
Misleading business practices may be challenged under the Unfair Competition Act. Depending on the specific case, measures such as cease-and-desist letters and injunctions may be considered. The amendments, which take effect on September 27, 2026, further clarify the requirements for environmental and sustainability claims.
Loss of Trust and Reputation
If a statement is perceived as misleading, the criticism often extends beyond that single claim. Other sustainability measures taken by the company may also lose credibility. This makes it difficult to communicate objectively about actual progress.
Economic Consequences
Campaigns, packaging, or product pages that are the subject of complaints may need to be modified. In addition, there are internal review costs and potential impacts on customer relationships, partnerships, or bids when sustainability claims are a factor in the decision-making process.
Internal Risks
Greenwashing does not always result from a deliberately false statement. Often, marketing, sustainability management, procurement, product teams, and compliance use different data sets or terminology. Without common guidelines, statements may be published whose origin and scope can no longer be traced later on.
What rules against greenwashing will take effect in September 2026?
With Directive (EU) 2024/825, the European Union has tightened the rules against misleading environmental and sustainability claims. The directive is also known as “Empowering Consumers for the Green Transition,” EmpCo, or ECGT. Germany implemented it in February 2026 through the “Third Act Amending the Act Against Unfair Competition” and the “Act Amending Consumer Contract and Insurance Contract Law, as well as Medical Treatment Contract Law.” The new requirements are to take effect on September 27, 2026. This is explained by the Federal Environment Agency regarding the current state of German law and by Directive (EU) 2024/825 in the Official Journal.
Key changes include:
- General Environmental Claims: Terms such as “green,” “eco,” or “environmentally friendly” generally must not give the impression of outstanding environmental performance if no recognized outstanding environmental performance relevant to the claim can be demonstrated. Not every use of a general environmental term is automatically prohibited; the claim, context, point of reference, and evidence are decisive. A mere explanation or footnote is not sufficient in every case.
- Sustainability labels: Sustainability labels are not permitted if they have not been established by government agencies or are not based on a transparent certification system that meets legal requirements.
- Statements about the product as a whole: An environmental performance that applies only to a part of the product must not be presented as a characteristic of the product as a whole.
- Product-related climate claims based on offsetting: Certain claims stating that a product has a neutral, reduced, or positive environmental impact in terms of its greenhouse gas emissions are prohibited if they are based on the offsetting of greenhouse gas emissions outside the value chain. This specific new prohibition does not apply in the same way to company-related claims; however, such claims must still be evaluated in accordance with the general rules on misleading advertising.
- Future-Oriented Environmental Performance: Statements regarding future goals must be based on clear, objective, publicly available, and verifiable commitments, as well as a detailed and realistic implementation plan.
- Comparative statements: Comparisons must be objective and based on a consistent method and consistent assumptions.
The new guidelines primarily concern business practices of companies toward consumers. They therefore cannot be applied across the board to all B2B communication. In the covered B2C context, in addition to traditional advertisements, websites, online stores, packaging, social media, product names, brands, logos, and other forms of commercial communication may also be relevant.
EmpCo and the Green Claims Directive are not the same thing
Directive (EU) 2024/825 has been adopted, implemented in Germany, and will take effect on September 27, 2026. The Green Claims Directive, which is also frequently mentioned, remains a separate legislative proposal and has not yet been adopted; interinstitutional negotiations are currently on hold. Therefore, as of September 27, 2026, the EmpCo Directive and its national implementation will be the governing framework.
What role do the CSRD and SFDR play?
The Corporate Sustainability Reporting Directive (CSRD) governs sustainability reporting by certain companies. It is not a general “greenwashing” law. In practice, published sustainability data can serve as a reference for verifying the consistency of corporate communications. This is a practical implication for internal claim verification, not an explicit individual requirement of the CSRD. The article on the CSRD and EU taxonomy provides an overview.
Financial market participants and financial products are also subject to specific transparency requirements, including those set forth in the Sustainable Finance Disclosure Regulation (SFDR). The SFDR is an EU regulation. Such sector-specific rules do not replace the general assessment of environmental claims.
Avoiding Greenwashing: A Checklist for Businesses
A robust process begins before publication. The following six steps bring together communication, data, and accountability.
1. Fully document environmental claims
Companies should first take stock of all their environmental and sustainability claims. This includes websites, online stores, packaging, campaigns, presentations, social media posts, product names, seals, and graphic elements.
Test result: A current list shows which claim is used where and who is responsible for it.
2. Specify the statement and point of reference
Every claim must have a clear subject. Does the statement refer to the product, a component, the packaging, a production step, or the entire company? The time period, geographic scope, and basis for comparison must also be clearly defined.
Test result: The statement can be understood correctly without any additional assumptions.
3. Review the supporting documents and methodology
The relevant departments verify whether the data, calculation methods, and supporting documentation actually support the conclusion. Figures should be reproducible. Certificates must be valid and specific to the particular application.
Audit result: For each claim, there is traceable documentation that includes the source, method, time period, and limitations.
4. Set Mandatory Approvals
Marketing can evaluate clarity and context. Sustainability management and functional departments review the data and methodology. The legal or compliance departments assess the legal requirements and the risks associated with the specific use.
Audit result: Roles, approval steps, and escalation procedures are documented.
5. Publish the statement and supporting evidence together
Key explanations should not be hidden in documents that are difficult to find. The point of reference and the core basis of the statement must be clear within the respective communication context.
Test result: Readers immediately recognize what is being claimed and where the supporting evidence can be found.
6. Update claims regularly
Data, certificates, products, and legal requirements change over time. That is why environmental claims need a verification date and a set update schedule. Changes to the product or the underlying data should trigger a new approval.
Audit result: Outdated or unsubstantiated statements are updated or removed in a timely manner.
What role do employees and internal processes play?
Credible sustainability communication is a shared responsibility. Marketing alone cannot assess how robust an emissions calculation is. Sustainability management does not automatically understand every communication context. Legal and compliance, in turn, require up-to-date data from the business units.
A shared understanding of terminology helps identify risks early on. For example, employees should be able to distinguish between:
- an intention and an environmental achievement that has already been realized,
- a product-related statement and a company-related statement,
- an actual reduction and compensation,
- a specific aspect that has been substantiated and a statement about the product as a whole.
Training programs can build this competency and embed the approval process into daily operations. However, they are no substitute for reliable data or technical and legal checks. A combination of clear responsibilities, documented evidence, and a shared understanding of how environmental claims are developed is particularly effective.
Credibility comes from specific and verifiable statements
Companies don't need to avoid communicating about sustainability. They need to make their sustainability communications robust. Specific points of reference, verifiable evidence, and clear approvals turn general promises into verifiable statements.
This not only reduces the risk of greenwashing; it also creates a more reliable basis for decisions made by customers, business partners, and other stakeholders. Companies that transparently assess their sustainability performance can credibly leverage sustainability as a competitive advantage.
FAQ
What is greenwashing, explained simply?
Greenwashing refers to the practice of portraying a company, product, or service as more environmentally friendly than is supported by reliable facts and evidence. This can result from false claims, but also from vague terminology, a lack of supporting evidence, omitted information, or the extrapolation of a positive aspect to the overall picture.
What are some examples of greenwashing?
Typical examples include blanket statements such as “environmentally friendly” without a solid basis, CO₂ comparisons without a baseline, sustainability labels without government regulations or a transparent certification system, or advertising an entire product based on a positive feature that applies only to the packaging or a single component.
Is greenwashing illegal?
“Greenwashing” is not a separate legal offense. However, misleading or otherwise unfair business practices may already be prohibited under the Unfair Competition Act. Starting September 27, 2026, more specific requirements will apply in Germany to general environmental claims, sustainability labels, certain product-related climate claims, comparisons, and environmental promises for the future. Whether a specific claim is unlawful depends on the individual case.
What changes will take effect regarding greenwashing starting in September 2026?
Effective September 27, 2026, the provisions of Directive (EU) 2024/825 as implemented in Germany must be applied. Among other things, they restrict certain general environmental claims, sustainability labels that are not established by the government or backed by an appropriate certification system, misleading claims about the product as a whole, and certain compensation-based climate claims for products.
How can companies avoid greenwashing?
Companies should record all environmental claims, clarify the reference point and basis for comparison, document appropriate supporting evidence, and establish binding approval processes involving marketing, sustainability management, functional departments, and legal or compliance. Each claim should be reviewed regularly along with its underlying data and updated as needed.
What is the difference between greenwashing and greenhushing?
Greenwashing portrays environmental performance as greater, better, or more definitive than the facts warrant. Greenhushing, on the other hand, describes the deliberate withholding of actual environmental performance out of concern for criticism or legal risks. Credible communication avoids both extremes: it remains concrete, transparent, and verifiable.
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