ROYAL BANK OF CANADA The current political climate has led to a stampede of companies, including a large number of Franchises, promoting that "going green" pedigree. As scientists and politicians debate the impact or existence of global warming, green industry practices enjoy favourable public sentiment, largely dependent on supportive government policies, leading to ever-increasing profitability. 1 As with any pioneering activity, it is not surprising that there is no widely accepted definition as to what constitutes "going green". Accordingly, many commercial practices have been criticized of being nothing more than "greenwashing." This article will analyze what exactly greenwashing is, how Canadian regulatory bodies are attempting to combat it, and provide commentary on how greenwashing/ the regulations surrounding it may impact franchisors and franchisees.
What is Greenwashing?
Greenwashing is when a company promotes its products or services as being environmentally conscious for marketing purposes, while in practice they are not actually taking any notable sustainability efforts.2 It is essentially a situation where an organization spends more time and money on marketing itself as environmentally friendly than on actually minimizing its environmental impact. It is a deceitful marketing gimmick which misleads consumers who prefer to buy goods and services from environmentally conscious brands. This issue of greenwashing is quickly becoming a priority for enforcement agencies, notably
Greenwashing is problematic not only because it is ethically wrong and illegal but because it has created a situation where many consumers do not actually believe companies when they make claims about their sustainability practices. This has created a world where companies big and small are afraid to tell society what they are doing to combat environmental issues for the fear people will say their actions are not enough, or people just will not believe them.
Why does Greenwashing occur?
Greenwashing can occur for a variety of reasons. One of these reasons stems from the fact that many CEOs and Corporate Boards are not as engaged with sustainability strategies as they should be. While 90 percent of corporate executives think sustainability is important, only 60 percent of companies have a sustainability strategy.3 Fewer still have anyone in a leadership role responsible for this activity. Often, companies adopt the sustainability bandwagon but do not support their marketing with leadership and budgets.
How is Greenwashing Challenged?
Aside from Consumer and Competitor activities, greenwashing has become an increased priority for enforcement agencies in
The Bureau has sent a clear message to the business community that it has a significant role to play in
Past Examples of Bureau Greenwashing Enforcement
In 2019, Ecojustice,
The Bureau investigated these claims and determined Keurig's assertions regarding the recyclability of its single-use coffee pods were false or misleading in municipalities that did not accept them for recycling. The Bureau found that, outside the provinces of
In
Other Sustainability Legislation:
The Consumer Packing and Labelling Act contains prohibitions against making false or misleading representations.11 The Trademark Act carries a prohibition against making materially false and misleading statements about the character, quality, quantity, composition, origin, production or performance of goods and services.12 The Canadian Advertising Standards Code states that Advertisements must not contain inaccurate, deceptive, or otherwise misleading claims, statements, illustrations or representations. All representations must be supported by competent and reliable evidence.13
Key Takeaways:
Companies, including franchisors and franchisees should not refrain from enhancing their products and services that are consistent with sustainability. In doing so, however, they must exercise caution in the scope and scale of their marketing activities. Businesses making environmental claims should avoid bold, broad statements, and instead ensure they make claims which are specific and accurate. The following best practices should be followed, as highlighted by the Bureau.14
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Make sure your claims are truthful and are not misleading;
- Make sure they are specific claims that are substantiated and verifiable;
- Make sure they are not claims that either result in a misrepresentation, or an extreme exaggeration of the environmental benefits of your product; and
- Do not imply your product is endorsed by a third-party environmental organization if it is not.
At
Footnotes
1. "Green Industry Analysis 2020- Costs & Trends" Franchise Help 2020, Online: https://www.franchisehelp.com/industry-reports/green-industry-analysis-2020-cost-trends/
2. Carlyann Edwards, "What is Greenwashing"
3.
4. "Misleading Representations and Deceptive Marketing Practices"
5. "False or Misleading Representations"
6.
7. "Keurig to pay
8. Ibid
9. "Keurig K- Cups" Sotos Class Actions. Online: https://www.sotosclassactions.com/cases/keurig-k-cups/
10.
11.
12. Trademarks Act, R.S.C., 1985, C. T-13
13. The Canadian Code of Advertising Standards, Ad Standards. 1963. Online: https://adstandards.ca/code/the-code-online/
14. "Environmental Claims and Greenwashing"
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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