The pressure to achieve Sustainable Development Goals (SDGs) and growing environmental concerns drive changes in the behavior of consumers, investors, and other market stakeholders. Thereby, investors increasingly invest in green companies and projects, while consumers choose eco-friendly products over traditional ones. Consumers and investors are also avoiding unfair practices by green companies.
In response to such a drastically transforming competition, companies quickly attempt to adjust their strategies to the trend of transitioning from overconsumption to green consumption; however, that has led to an increase in the use of greenwashing as an unethical marketing tool by companies to promote their green achievements. In the end, greenwashing erodes the trust in the markets.
Sustainable development, a buzz term frequently addressed in political and economic debates, is characterized as a form of development that satisfies the needs of the present without jeopardizing the ability of future generations to meet their own needs1. In 2015, the United Nations agreed on Agenda 2030, a political initiative to achieve a comprehensive, transformative, and people-centered set of universal goals and targets by 2030. The agenda comprises 17 Sustainable Development Goals (SDGs) and 169 associated targets, intending to encourage action over the next 15 years in critical areas for humanity and the planet.2 The SDGs and targets strive to balance the economic, social, and environmental aspects of sustainable development. The snowballing impact of the SDGs in addressing environmental issues has led to the evolution of missions, strategies, and policies of companies, with a focus on green trends. However, the open boundaries of the global market also create a high level of competitiveness, which encourages the production of high-quality green products.3
Despite the growing awareness of SDGs, a recent survey found that only half of the companies surveyed acknowledged or identified priority SDGs, and only a quarter disclosed meaningful targets and KPIs related to SDGs or mentioned them in their business strategy. Similarly, other studies have found that while many companies acknowledge SDGs in their corporate reporting, only some have set specific and measurable business performance targets or demonstrated a substantive business case for action. Moreover, the involvement of companies in SDGs is still limited and largely symbolic and intentional rather than substantive.4 Far worse than that, misleading information regarding the contributions of companies to the SDGs, also known as greenwashing, has become more prevalent due to the growing interest in sustainability reporting and the profit-oriented effect of company actions on the environment.5 In other words, the pressure and the meretricious pros of green markets somehow have led to greenwashing through positive communication about environmental performance despite poor environmental performance.
The negative impact of greenwashing was demonstrated by Volkswagen in 2015, as it led to a loss of €7 billion in profits, decreased investments, and reputational damage. The scandal caused a decline in consumer trust in the "Made in Germany" brand and reduced the investment appeal of the market. The automobile companies' shares' value decreased by 3-14% in 2015. Therefore, employing greenwashing adversely affects the company's image and can lead to reduced green investments.6
Various frameworks, guidelines, and checklists for greenwashing have been created by different actors, including academics, non-governmental organizations, and business consultants, for wide-range reasons, such as helping companies to avoid greenwashing, assisting consumers in identifying greenwashing, and providing guidance for policymakers in creating regulations to combat greenwashing.7 Nonetheless, the large gap is still present in the relevant literature. The mostly referred forms of greenwashing are particularly in several themes, dubious certifications, labels, and co-opted endorsements. Yet, the criterion behind such themes is blurred to assess whether an actor engages in greenwashing.8 Additionally, even though the multi-assessment approaches have been designed to avoid the subjective judgment of weighting indicators when evaluating green performance, some of the indicators may carry more weight in the overall score due to their broader assessment coverage. Eventually, such assessments may be deceptive in practice.9
Research shows that information provided through blockchain technology is more effective than certification systems in preventing greenwashing. By offering verifiable information, this information may support the development of sustainable products, protect the intellectual property rights of green product suppliers, and ensure that green products are reliably available to consumers.10
Sebastião V. De Freitas Netto et al., "Concepts and forms of greenwashing: a systematic review," Environmental Sciences Europe 32, no. 1 (2020): doi:10.1186/s12302-020-0300-3.
Filip Johnsson et al., "The framing of a sustainable development goals assessment in decarbonizing the construction industry – Avoiding "Greenwashing"," Renewable and Sustainable Energy Reviews 131 (2020): doi:10.1016/j.rser.2020.110029.
Tetyana Pimonenko et al., "Green Brand of Companies and Greenwashing under Sustainable Development Goals," Sustainability 12, no. 4 (2020): doi:10.3390/su12041679.
Johnsson, "The framing of a sustainable development goals assessment in decarbonizing the construction industry – Avoiding "Greenwashing"."
Wayne Moodaley and Arnesh Telukdarie, "Greenwashing, Sustainability Reporting, and Artificial Intelligence: A Systematic Literature Review," Sustainability 15, no. 2 (2023): doi:10.3390/su15021481.
Pimonenko, "Green Brand of Companies and Greenwashing under Sustainable Development Goals. "
Noémi Nemes et al., "An Integrated Framework to Assess Greenwashing," Sustainability 14, no. 8 (2022): doi:10.3390/su14084431.
Arne Nygaard and Ragnhild Silkoset, "Sustainable development and greenwashing: How blockchain technology information can empower green consumers," Business Strategy and the Environment, 2022, doi:10.1002/bse.3338.