Time for better consumer safeguards in S'pore over 'greenwashing' products that are not sustainable

At a recent Youth4Climate forum in Milan, a prelude to the COP26 climate summit, Swedish youth activist Greta Thunberg chastised world leaders for paying lip service to the grandiose plans that they have announced for the environment with no concrete actions. 

The Thunberg outrage epitomises the new attitudes of the youth, particularly millennials or Gen Y,  or even Gen Z. And these are the groups that will form the next breed of consumers making key purchases.

The rise in environmentalism among the youth has fuelled demand for sustainable products. Businesses are adapting accordingly.

However, not all businesses are doing it the "right" way as some have chosen to so-called "greenwash" their offerings and make consumers believe that their products are sustainable when they are not.

WHAT’S GREENWASHING?

A South Korean customer of Innisfree, a beauty products retailer targeting youth, reported feeling outraged upon discovering that the ”eco” packaging with a label that read: “Hello, I’m Paper Bottle” was actually a plastic bottle wrapped in paper.

Innisfree said it was “deeply sorry for the confusion caused” and stated that the packaging in question uses 51.8 per cent less plastic than regular packaging.

However, the customer accused the brand of “misleading marketing” that could have caused ee buyers to wrongly believe that they could minimise the packaging impact on the environment.

SingGas, a company that sells liquefied petroleum gas (LPG) came under the spotlight for promoting LPG as environmentally friendly in its advertisement on various social media platforms.

While LPG is cleaner than other fossil fuels, it still creates greenhouse gas, leading non-profit group Singapore Youth for Climate Action to describe SingGas’ claim as “irresponsible”.

The company later said it has stopped the ads.

Greenwashing is not a new phenomenon. But it has received intense attention only recently. It is the action of evading consumers into believing that the products or services offer positive environmental benefits.

More specifically, greenwashing involves either selective disclosure or decoupling. Selective disclosure is embellishing information related to positive environmental performance and concealing information about negative environmental performance.

Decoupling entails putting a positive spin on the communication of the firm’s corporate social actions despite having a negative corporate social action performance.

In a joint study, the United Kingdom’s Competition and Markets Authority and The Netherlands Authority for Consumers and Markets found that 40 per cent of 500 international websites offering clothing, cosmetics, and food products displayed elements of greenwashing.

These include ambiguous claims of products being sustainable in the absence of evidence, the display of eco-labels that are not affiliated with any accredited organisation, or the withholding of negative environmental information about products to give the impression of environmental-friendliness.

A 2018 Nielsen survey with global consumers revealed that 41 per cent of the consumers are willing to pay a premium for products from sustainable sources (that is all-natural or organic ingredients).

Consumers with higher environmental knowledge tend to be more discerning in identifying if a company is engaging in greenwashing.

However, the use of visual imagery depicting nature in greenwashing advertisements results in individuals having a more nuanced view of those ads, thus mitigating the negative effect of greenwashing.

The upshot of the survey is that awareness is most crucial as knowledge is needed so that consumers do not fall for greenwashing.

WHAT ARE THE SAFEGUARDS?

Increasingly, countries around the world are introducing safeguards to combat greenwashing. In the UK, the Green Technical Advisory Group has been tasked to oversee the Green Taxonomy framework to eradicate greenwashing.

In the United States, the Federal Trade Commission has released Green Guides to help businesses avoid committing greenwashing in their marketing claims.

Notably, in the Netherlands, businesses can be fined up to 1 per cent of their gross turnover for making misleading claims.

The UK’s Competition and Markets Authority has taken it a step further and in May this year issued a draft consumer protection law guidance for all businesses making environmental claims for public consultation.

The UK government understands that the public is increasingly seeking sustainable products due to concern for the environment.

However, it recognises that there are dishonest businesses taking credit for being sustainable while the efforts of truly sustainable businesses go unnoticed.

With concerns about greenwashing, the UK government conducted public consultation on greenwashing protection laws and policies before issuing guidance in September to help consumers and businesses understand what constitutes green claims.

The aim of the guidance is to inform consumers so that they will not fall prey to greenwashing and to help businesses avoid greenwashing.

WHAT CAN BE DONE IN SINGAPORE

In Singapore, the Consumer Protection (Fair Trading) Act (CPFTA) guards the consumer against poor business practices.

These include the act of deceiving or misleading, making of bogus claims and gaining advantages over consumers knowing that they cannot judiciously understand the consequence of the transaction.

If the consumer believes that he or she has been subjected to unfair business practices, complaints can be lodged with the Competition and Consumer Commission of Singapore. 

CPFTA does not explicitly cover greenwashing because it is difficult to prove that this constitutes unfair business practice.

In addition, under the Misrepresentation Act, if a consumer believes that he or she has entered a business transaction after a misrepresentation was made, damages can be sought from the merchant. 

The Act covers damages that arise from contractual agreement, and it is burdensome to prove that damage has occurred from misrepresentation due to greenwashing.

In terms of advertising, the Singapore Code of Advertising Practice recommends that all advertisements should be legal, decent, honest and truthful.

The code comes under the auspices of the Advertising Standards Authority of Singapore which is an advisory council of the Consumer Association of Singapore. 

While it serves as a useful guide, more clarity is needed on what constitutes greenwashing in advertising.

Given the expected rise in greenwashing, existing rules and regulations in Singapore may have to be enhanced to protect consumers and help businesses avoid greenwashing.

While Singapore has laws such as the CPFTA and Misrepresentation Act, and guidance such as the Singapore Code of Advertising Practice, they do not explicitly cover greenwashing, and the onus is often on consumers to determine what constitutes greenwashing.

To provide better protect consumers, it would be a good idea for the regulatory agency to seek public consultation on greenwashing protection laws and policies like what has been done in the UK.

Most of all, it will also be critical to educate consumers on greenwashing. Advocacy bodies like CASE will be well-poised to spearhead consumer education on greenwashing. They can partner educational institutions in this endeavour.

ABOUT THE AUTHORS:

Lawrence Loh and Yvonne Yock are director and research associate respectively at the Centre for Governance and Sustainability, NUS Business School, National University of Singapore.