What is Greenwashing?

Greenwashing is the act of misleading customers and potential customers into believing that a product or service is environmentally friendly.

How Does Greenwashing Work?

Let's say Company XYZ produces a new line of plastic food containers. It labels the containers 'tree friendly' because they are not made from wood or forest products. This creates the perception that the company is not harming nature to make the food containers, when in fact it is using petroleum products that many argue are more harmful to the environment. Company XYZ is attempting to greenwash its products.

Why Does Greenwashing Matter?

Greenwashing is deceptive advertising often intended to increase sales rather than inform customers. Additionally, greenwashing often covers up activities that are in fact harmful to the environment. There are many ways to greenwash, and it is up to consumers to think carefully about a company's claims.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.