I went to a farmer’s market a couple of weeks ago and stopped at a stand for a locally owned coffee roasting company. The word “SUSTAINABLE” was printed in bold green letters on some of their bags of coffee.

I asked the woman working there what that meant and she said, “Uh….it’s something to do with fair trade, I think….” There were other bags of coffee with “fair trade” on the label, but not “sustainable.” I asked why, but she couldn’t tell me.

So, yeah, I was then skeptical about the company’s claims and labels. And I didn’t buy coffee there. These days, you’re asking for trouble if you throw around words such as “eco-friendly” or “sustainable” without being able to substantiate it. If you’re going to use those terms, you and your employees should be able to clearly explain what it means for your products or services, and even your operations.

While this is a small example, and the company probably wasn’t deliberately making misleading statements, it shows how companies can leave themselves open to greenwashing accusations.

“Greenwashing’ is when a company makes false or misleading statements that their products/services are more sustainable than they are in reality, to appeal to customers interested in environmentally friendly and sustainable practices, nudging them to buy these ‘green’ products.“

Source: Social Media, Sustainability and Organizations; https://www.sciencedirect.com/science/article/pii/B9780124095489119724

Large companies are more likely to face greenwashing claims than small ones. An example, from the fashion industry, is Zara and their “Join Life” initiative. According to greenchoicelifestyle:

“While the Join Life label is prominently featured, the majority of Zara’s clothing is still produced using conventional, resource-intensive methods. This selective focus creates a misleading impression that the entire brand is sustainable.

Moreover, Zara’s claims about using sustainable materials often lack clarity and transparency. Terms like “organic cotton” and “recycled polyester” are used liberally but without detailed information on sourcing, certifications, or the percentage of these materials in each product. This vagueness makes it difficult for consumers to verify the authenticity of Zara’s sustainability claims.”

Consumers seek out companies that operate more sustainably. According to surveys, such as one by Globescan in March 2025, “there is significant unmet demand for sustainable products, with more than one-third of consumers citing factors that hindered their purchasing desire.”

However, many companies are stuck between a rock and a hard place.

They want to advertise their sustainability initiatives and progress, but not leave themselves open to accusations of false claims. What’s more, many jurisdictions now have “greenwashing laws” in which companies can be fined if found guilty of greenwashing. For example, the EU has introduced the Green Claims Directive expected to come into force in 2027. According to KPMG, the Directive will apply to all companies operating in the EU, including small and medium-sized enterprises.

Note: Whitewashing and bluewashing are related terms. Whitewashing is a term that means masking harmful behavior and activities by using misleading information.

While greenwashing usually relates to environmental sustainability, bluewashing means using false claims about social aspects such as health & safety.

There are risks associated with all three types of “-washing,” such as a loss of trust in your company, fines and investigations by authorities, and litigation.

These are 4 common ways that companies engage in greenwashing, in other words, making claims without supporting evidence and data:

1. Advertising ambitious goals, such as reducing emissions by a certain percentage, but not making any actual improvements
2. Using vague terminology, such as adding “eco-“ in front of a product name
3. Focusing on one product or aspect of the business and ignoring negative impacts of other products/ aspects
4. Advertising significant benefits from small and insignificant actions

source: https://assets.kpmg.com/content/dam/kpmgsites/uk/pdf/2024/12/the-challenge-of-greenwashing.pdf.coredownload.inline.pdf

Recent examples of greenwashing

The best ways to avoid greenwashing claims

“[When your team] is looking to report on sustainability efforts, it’s important to follow ESG disclosure best practices. There are also some important things to consider in order to avoid the perception of greenwashing. 

High quality ESG disclosure includes the use of a reputable ESG reporting framework, like the Global Reporting Initiative (GRI), the Principles for Responsible Investment (PRI), or the Sustainability Accounting Standards Board (SASB). 

These frameworks require management teams to include considerable data and metrics, which are standardized and comparable.”– The Corporate Finance Institute

So, whether you’re a coffee company or other type of small business, there’s 4 simple actions you can take to be seen as a sustainability champion versus a fake:

1.  Include sustainability as a part of your core business strategy with clear goals and targets.
2. Provide publicly available sustainability reports based on accepted standards. Using standards provides the methodology and documentation to ensure your data is verifiable.
3. Be transparent about negative impacts and areas where you need improvement so that you offer a balanced view. Standardized sustainability reporting will help you to do this.
4. Educate staff (especially the ones who are public-facing or handle marketing) about the company’s sustainability efforts.    

If you want to become a more sustainable company – you should shout it from the rooftops! Just make sure that you follow reporting standards – this will help you cover all of your bases as far as tracking the correct data and documenting where it came from. Then, you can sit back and enjoy accolades instead of accusations!

Key takeaway: The best way to avoid greenwashing accusations is by sharing your progress via sustainability reports that include accurate data are based on accepted standards, such as the GRI Standards.