Good News: Greenwashing Isn’t So Prevalent After All

What do you do if a company wants you to help with greenwashing?

The recurrence of this question indicates to me that while greenwashing may seem like a somewhat tired conversation to those of us who follow sustainability closely, it’s still a big concern to the thinking public.

Academic researchers affiliated with the Ray C. Anderson Center for Sustainable Business at Georgia Tech may have closed the book on at least one question regarding the prevalence of greenwashing in industry. (Disclosure: The Ray C. Anderson Center is a client of my firm, New Growth Communications.) Manpreet Hora and Ravi Subramanian, both associate professors of operations management, analyzed whether or not companies that voluntarily published information about their environmental intentions or achievements actually performed better or worse than their more reticent peers.

They found companies making positive discretionary disclosures in the press significantly reduced their overall releases of pollutants—as measured by the U.S. EPA’s Toxics Release Inventory (TRI)—compared to similar firms that did not.

“The research suggests that at least one form of greenwashing isn’t prevalent,” said Manpreet Hora. “We designed the study to test whether or not there was a so-called ‘hidden trade-off,’ meaning that one set of positive environmental outcomes was emphasized while other negative and potentially more serious outcomes were overlooked. Fortunately, that didn’t seem to be the case.”

The full study, “Relationship between Positive Environmental Disclosures in Press Announcements and Environmental Performance,” has been accepted for future publication in the Journal of Industrial Ecology. However, the Ray C. Anderson Center just published a research brief on the study in its new Sustainable Business Insights series for practitioners.

The study built on a data set previously used by Subramanian and another researcher at the Center to study how positive environmental disclosures did or didn’t affect shareholder value (Jacobs et al, 2010). But instead of correlating the disclosures to stock prices, Hora and Subramanian correlated the disclosures to environmental performance scores, which they devised from aggregating comprehensive TRI data about chemical releases across company facilities after weighting the releases for varying levels of toxicity. Then they compared the scores to a control group of companies that did not “toot their own horns,” so to speak.

“The overall environmental performance of the 200 firms that made press announcements was better than that of the control firms that shared similar characteristics such as size, industry, and prior environmental performance,” Hora said. “This should be good news to both stakeholders and activists.”

However, Hora pointed out the lack of greenwashing could be the result of external watchdog pressure. Hora and Subramanian’s paper cites an earlier study published in the Journal of Economics and Management Strategy (Lyon and Maxwell 2011) that observed a phenomenon I’ve experienced in which firms with good environmental performance and nothing to hide are hesitant to talk about themselves for fear of drawing more intense scrutiny.

Hora and Subramanian also analyzed their findings to compare the measured environmental improvements of companies in industries categorized as clean or dirty, and to compare the performance of companies that announced environmental intentions against those that announced environmental achievements. Interestingly, the firms in dirty industries had stronger improvements in environmental performance than those in non-dirty industries. And improvements were statistically the same for companies that announced environmental intentions compared to those that announced achievements.

It’s important to note EPA’s TRI doesn’t track carbon dioxide, so this study doesn’t apply to corporate claims about fighting climate change. Additionally, it doesn’t address political greenwashing, a pressing concern that some companies talk a good game publicly while quietly lobbying lawmakers behind the scenes to uphold or institute damaging environmental policies.

Nonetheless, I recommend the research brief to any practitioner who has three minutes to spare and an interest in understanding greenwashing better. If you’re really curious, the paper will be a good entry point to the academic research on the topic, with interesting citations to discussions on institutional theory and legitimacy gaps.

Image credit: Neep/Wiki Commons