After reading “The ‘six sins of greenwashing’: A study of environmental claims i

Question

After reading “The ‘six sins of greenwashing’: A study of environmental claims in North American markets (Links to an external site.)Links to an external site.,” discuss the tension between business’s interests in maximizing profits and the public’s interest in receiving complete, truthful, and non-misleading information about products that they purchase. From a business perspective, what are the dangers of greenwashing? If you were a marketing executive, would you have a policy against greenwashing? Why or why not?

Explanation / Answer

Business (firms) and households (public) are the two most important players of the market based economy and businesses cannot survive if households don’t create demand. In the market driven economy, it is well proven that it is the demand that creates supply. It makes imperative for the firms to stringently prevent the practice of greenwashing. A practice of greenwashing involves false or exaggerated claims made about the product and or brands to mislead the customers. The two sins of greenwashing are most prominent, the first one is hidden trade off, contributing to the 57% of greenwashing. Another sin is claims with no proof, contributing to the 26% of the greenwashing. Such practices do no lead to the sustainability and government intervenes to either take penal action against the company or take other disciplinary action against the company, even in the market economy. So, the company cannot make a tradeoff in passing a correct information to the consumers. They have to strictly provide the correct, measured and well acknowledged and certified information to the consumers to build a sustainable brand. It is the reason that stakeholder theory is developed and accepted among the corporate and public as well. It is used to ensure that interests of all the stakeholders in the economy without making any tradeoff.
There are many dangers of greenwashing from the business perspective. These are as follows:
A.   Development of lack of trust about the brand and building of negative reputation
B.   Poor brand positioning
C.   Losses to consumers as they fell prey to the false claim of producers
D.   Scope of adverse selection due to the asymmetry of information
E.   Government interventions to regulate the economy that makes all he firms to suffer

Yes, I have a policy against the greenwashing as the greenwashing leads the company towards the danger of stringent government action, loss of brand equity, negative reputation and possible closure of the company. Hence, it is very important for us to have a policy against the greenwashing

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