Environmental groups are suing Dutch airline KLM, alleging that advertisements promoting the company’s sustainability initiative are misleading.
- The groups say it’s the first lawsuit to challenge so-called airline industry “greenwashing”.
- They argue that KLM advertisements and their carbon-offsetting scheme create the false impression that its flights won’t make climate change worse.
What is Greenwashing?
- Greenwashing is when an organization spends more time and money on marketing itself as environmentally friendly than on actually minimizing its environmental impact.
- It’s a deceitful marketing gimmick intended to mislead consumers who prefer to buy goods and services from environmentally conscious brands.
- Environmentalist Jay Westerveld coined the term “greenwashing” in 1986, in a critical essay inspired by the irony of the “save the towel” movement in hotels that had little impact beyond saving hotels money in laundry costs.
- Early definitions of Greenwashing revolved mostly around environmental claims. Today, with the evolution of Environmental, Social & Governance (ESG) as an analysis framework, the market’s understanding and interpretation of “sustainability” has expanded to include Social and Governance factors as well.
- Now, greenwashing activity may now include statements that extend beyond just environmental claims.
- The Securities and Exchange Board of India (SEBI) has proposed tighter norms in a recent consultation paper on ESG (environmental, social & governance) to check greenwashing by companies.
- As the concept started gaining interest among the investor fraternity, a lot of companies tried to mis-sell them with the aim of scoring better on the ESG scale.
- In a move to ensure fair assessment of companies, SEBI has mandated that only accredited ERP (ESG Rating Providers) can issue ESG ratings.
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