I had always considered myself to be an ethical investor - but a few facts in these posts gave me pause for thought and to eventually re-evaluate my position - and here’s why.
I’d heard of the term ‘greenwashing’ many times over the last ten years or so but frankly hadn’t given it much further thought as I felt I knew what I was doing and where my money was being invested. That is until now. After reading this article I did some fact checking of my own and found a few scary results.
Well first of all I guess it’s a good idea to define ‘greenwashing’. Essentially it encapsulates the activity of corporate entities which spend more time and money claiming to be “green” through advertising and marketing than actually implementing business practices that minimise environmental impact.
That seems simple enough. But why does it matter? In simple terms it is a form of mass public deception - whereby brands aim to convince you and I that they are producing products that are safe for both the environment and us to ensure that we will unwittingly continue to put our revenue into a dirty and exploitative company.
Money is the key here; it was clearly identified in a 2017 Unilever report that a third of consumers prefer sustainable brands. So it makes sound economic sense to promote products that appeal to the consumer who is environmentally conscious. Unfortunately many major, and minor, companies have seen the easy to route to profitability in making claims for their products that are not altogether true in order to gain a competitive advantage over their rivals.
Following on from this further study of consumers from Brazil, India, Turkey, UK and the USA by Unilever revealed that there was over a “$1 trillion market opportunity for brands that can effectively and transparently market the sustainability of their wares”. Within their findings, and of great significance here, is that the responders clearly indicated that their purchasing choices would be influenced by the message of sustainability that was emphasised through marketing and packaging – so this left a lot of ’scope’ for the less-ethical to focus on PR and not so much (if at all) on the actual products…
So what have been some of the biggest greenwashing discoveries (malpractices) over the years? Let’s have a look.
It will come as no great surprise to see the major oil companies on the list.
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BP had a major advertising campaign suggesting that they were moving towards renewable fuel which was imaginatively (not) entitled ‘Beyond Petroleum’ (BP - get it?) that actually cost more than any of their alleged green efforts – simultaneously they bought into the Athabasca Tar Sands in Alberta Canada to recover 200,000 barrels of oil a day which also generates about 128,000 tons of CO2 per day. BP aren’t alone here as amongst others Exxon and the China’s CNOOC also have bought in.
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More recently Shell is claiming to offset emissions from customers at their petrol stations across the UK by reforesting land in Scotland.
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To suggest that a SUV Hummer, with an average mpg of around 9 was anywhere near ‘Gas-Friendly to Gas-Free’ or eco-friendly would be something of a stretch but that didn’t stop General Motors from claiming that gas-guzzlers were just that.
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If you care about the plight of orangutans and were tempted to invest in the Malaysian Palm Oil Council by their series of ads with the tagline “Sustainably Produced Since 1917” to help your cuddly furry friends - then think again, as that slogan couldn’t be further from the truth as they chop down the rainforest to make way for their palm oil plantations.
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Closer to home, and more recently, a Ryanair UK advert was banned by the watchdog for greenwashing. The ad claimed that they had the “ lowest carbon emissions of any major airline ” but this was found to be misleading and could not be backed-up legitimately; i.e. false advertising in order to steal a march on their competitors by exploiting an environmentally conscious consumer base.
And so the list goes on – with
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McDonalds ( paper straws that aren’t recyclable after all ),
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L’Oreal ( a company that tests on animals claiming to be vegan-friendly! ),
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Monsanto (a company that produced ‘RoundUp’ and still produces terminator seeds - look that one up - claiming to be sustainable!) and
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H&M ( a company that introduced a ‘recycling programme’ and encouraged you to give them your unwanted clothes in exchange for clothing coupons to buy more clothes from them, whilst the ‘recycled clothes were sent to developing countries that couldn’t cope with the process! ) as just a few more examples of large international companies that have been economical with the truth.
So if after all that you think that you really are an ethical investor maybe it’s time to look at your portfolio again with a fine tooth comb to make sure, I sure am going to!