Getting Beyond Greenwashing: Why Companies Need To Rethink Their Approach to Sustainability

It’s good to be green, but it’s not easy. Changing the way products are made or packaged, abandoning longtime practices in favor of more ecofriendly options, or adopting new technologies to meet sustainability targets can involve high cost and risk. The temptation to greenwash—to appear to limit environmental impact without actually doing so—may rise.

Pascual Berrone, professor of strategic management and the Schneider Electric Sustainability and Business Strategy Chair at IESE Business School in Madrid, has spent the last 10 years studying this phenomenon. Although the backlash against companies that commit greenwashing is typically swift, it doesn’t seem to be a deterrent. As consumers, we can see evidence of this practice everywhere, in claims of “all-natural” foods and cleaning supplies, of homes and appliances that purport to be energy efficient, of products that are falsely labeled biodegradable, and so on. Companies may feel more pressured than ever to tout their sustainability, amid global accords such as the United Nations’ Sustainable Development Goals and the Paris Agreement on climate change. Yet Berrone’s research indicates that greenwashing causes more harm than good, in terms of both companies’ standing in the world and their market value. When he meets with executives around the globe, he quantifies this harm in an attempt to dissuade future malpractice.

Rather than letting what he calls “green lies” make him a cynic, Berrone maintains an optimistic view that corporations can, and will, do better—especially if they have a chief executive with the informal power to drive top-down change. Berrone recently spoke about how companies can approach sustainability in a way that effects real environmental improvement, by embracing it as part of their strategy and prioritizing action over rhetoric.

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