With increasing information and education about environmental issues, people are more aware of the negative impacts their actions have on the environment, from pollution to deforestation and climate change. People are beginning to understand how their individual choices, both what they consume and how they consume it, can affect the environment in the long term. This includes everything from the use of single-use plastics to the preference for local and sustainable products.
Furthermore, events such as natural disasters, droughts, floods and the loss of biodiversity are increasingly present in the public consciousness. These events serve as reminders of the importance of protecting and preserving the environment.
These factors have led to a considerable decrease in the consumption rates of some companies, whose economic activity affects the environment and health, opting for much more environmentally and socially responsible means. Therefore, many companies are adopting more sustainable and transparent practices in response to public pressure and government regulations. This includes, but is not limited to, reducing carbon emissions, eliminating harmful chemicals and using recycled materials in their products.
However, not all corporate initiatives in favor of sustainability are as genuine as they seem. This is where the concept of greenwashing comes in – a practice in which companies “deceive†(intentionally or not) consumers and other stakeholders into believing that their products or policies are environmentally responsible when, in fact, they are not. This trend has become increasingly common as the demand for sustainable products and services increases. Therefore, it is crucial for both consumers and companies to be alert and know how to identify greenwashing practices in order to make informed decisions and truly embrace efforts to contribute to the care and preservation of the environment.
What is greenwashing ?
Greenwashing  can be carried out using various strategies, the most  common being through marketing strategies. This type of marketing uses the color green or images related to nature or phrases that convey to the market a company’s commitment to sustainable practices. It can also be carried out through superficial actions that appear to be ecological but do not actually generate a significant impact on reducing the company’s environmental footprint. Finally, greenwashing is also considered to be the “makeup” of sustainability reports in order to comply with certain regulations in some countries or to meet commitments made to creditors or investors.
A case of greenwashing was the well-known “Diesel Dupeâ€Â in which several car manufacturers, mainly in Europe, were accused of manipulating emissions tests on their diesel vehicles to make them appear to meet environmental standards when, in fact, they emitted much higher levels of pollutants. This scandal became public in 2015, when it was discovered that certain diesel vehicles were equipped with emissions-manipulating devices that detected when laboratory tests were being carried out and temporarily reduced emissions to pass the tests, but under normal driving conditions they emitted significantly higher amounts of pollutants. This resulted in significant legal repercussions, fines and loss of confidence in the automotive industry. 4
Likewise, in 2021, the global furniture multinational Ikea was singled out by the non-profit organization Earthsight for using unsustainably sourced wood in some of its products, including tables, chairs, beds and wardrobes. Earthsight was able to trace sales of wooden furniture to forests linked to illegal logging in protected regions of Russia. The wood supplied to Ikea was certified by the Forest Stewardship Council (FSC) as coming from responsible sources. The FSC is an independent non-profit organisation that aims to support responsible logging of wood by offering companies a sustainability certification visible to consumers. Ikea denied any wrongdoing in this case, but announced a temporary ban on wood from Siberia and Russia. They subsequently stopped using the specific supplier in question. Ikea continues to use FSC certification for its products and has committed to eliminating deforestation linked to key materials by 2025.
Another case happened in 2023 when the UK advertising regulator banned a series of advertisements from certain companies in the petrochemical and hydrocarbon industries for exaggerating the companies’ progress towards net zero , 5 and  their production of alternative fuels, such as biofuels. 6  This stemmed from claims by many non-profit organisations that the published advertisement was false. For example, Climate Rebellion reported that one of the companies was trying to hide the data of its true negative impact on the environment and to mislead the public by promoting false solutions to the climate emergency. The platform pointed out not only the company ’s greenwashing advertising campaigns , but also the development of controversial new technologies such as fossil hydrogen, carbon capture, synthetic fuels, biofuels or unsustainable green hydrogen projects, whose economic, energy and environmental viability was highly questionable.
What factors encourage greenwashing ?
Among the main factors that motivate companies to engage in greenwashing practices are: 7
- More profits:Â By promoting their products as green, companies can charge more and increase their profits, or even if they don’t charge more, they can attract more consumers and increase their sales.
- Competitive advantage: Companies can use greenwashing as a strategy to differentiate themselves from competitors.
- Lack of clear regulations:Â Mainly in developing countries, such as Guatemala, where there are no clear regulations and guidelines on environmentally friendly products or services and/or there is no authority to enforce them, companies can make vague claims about their products or services without being responsible.
- “Formal†regulatory compliance: Greenwashing can be a way for companies to appear to comply with environmental regulations without making substantial changes to their business .
What are the risks of greenwashing for companies?
It is important to address the issue of greenwashing in the current business context, as it has negative consequences not only for consumers or users, but also for companies. The consequences for companies include:
Legal risks
Although there are no specific sanctions for greenwashing in Guatemala, there is legislation that could be applicable in specific cases:
- Non-compliance with regulatory aspects : 8  A good part, if not all companies, are required to have an environmental instrument approved by the Ministry of Environment and Natural Resources (MARN), for which it is necessary to present an environmental impact study or a similar environmental diagnosis depending on the activity to which the company is dedicated. The objective of the environmental instrument is to prevent, mitigate and restore damage to the environment, as well as the regulation of works or activities to avoid or reduce their negative effects on the environment. Based on the environmental instrument, the environmental authorities determine what type of environmental license to obtain, which will dictate what environmental actions and commitments the company must take to mitigate its environmental impact.
If the company does not have its environmental instrument approved by the MARN, or if the environmental instrument is made based on false information, as well as if the company does not comply with the actions contained in the environmental license or related resolution, or fails to comply with any other environmental commitment, it may be sanctioned with fines of up to Q. 100,000.00, without prejudice to being affected by the closure of the project, work, industry or activity in case of non-compliance with the provisions of the environmental regulations.
- Non-compliance with consumer or user protection regulations: According to Guatemalan legislation, misleading advertising that leads consumers or users into error through trickery or deception in order to defraud them of their assets to the detriment of themselves or a third party is prohibited. 9  The law also penalizes companies that provide information that cannot be verified or that is misleading or deceptive. If the company engages in any of these actions, it may be fined up to eighty times the minimum monthly wage in force for non-agricultural activities. 10  It may also receive a public warning to be published in the mass media, among other sanctions.
- Non-compliance with regulations and commercial principles: This could also involve a civil action for unfair competition. According to Guatemalan legislation, among the acts that are considered unfair competition, is the act of deceiving or confusing the general public or certain persons through a series of actions, including the use of false indications about the origin or quality of products or services, or the false mention of honors, awards or distinctions obtained by them. 11 An example of the latter at an international level is the recent case of an action brought by Iberdrola against Repsol, which although it was brought under Spanish legislation, the underlying principle is quite similar. 12
Business risks
- Loss of consumer or user confidence: greenwashing shows a lack of transparency and this can erode a company’s reputation, directly affecting its positioning in the market, not only locally but internationally .
Social risks
- Impact on long-term sustainability: Greenwashing actions can undermine a company’s genuine efforts to become more sustainable, preventing it from consciously investing in contributing to solving problems that affect society at large.
Strategies to Prevent Greenwashing
Corporate responsibility plays a critical role in the fight against greenwashing by promoting transparency, ethics, and a genuine commitment to sustainability. Here are some ways in which corporate responsibility can counteract greenwashing :
- Genuine commitment to sustainability:Â A company committed to corporate responsibility does not make empty claims about its commitment to the environment, but actually implements policies and practices that reduce its environmental impact and promote sustainability throughout its value chain.
- Investing in sustainable practices: Investing in sustainable technologies and practices that reduce your environmental footprint and improve your social performance. This can include adopting renewable energy, reducing waste, using natural resources responsibly, and respecting human rights throughout the supply chain. Also, securing recognized and verifiable certifications and standards to avoid being accused of greenwashing .due to the fault of a third party, as in the case of Ikea mentioned above.
- Transparency and communication:Â adopt transparent practices when reporting on the company’s environmental and social impacts, as well as the measures they are taking to address these issues.
As stated above, companies need to commit to transparency and authenticity in their sustainability practices. Although many greenwashing cases currently focus on civil or commercial actions (e.g. unfair competition or misleading advertising) rather than criminal actions (e.g. fraud) that would have stronger deterrent effects, several countries are implementing stricter regulations to prevent greenwashing 13 and   several investors are also including specific provisions in their policies to avoid becoming involved with companies that engage in greenwashing . 14  Therefore, public and regulatory scrutiny is expected to increase in the future, requiring companies to become more aware and take the necessary measures to prevent greenwashing at all levels and areas of their value chains.
At ARIAS, we are committed to helping companies navigate the complex landscape of sustainability and social responsibility. We understand the challenges of greenwashing and offer advice to ensure your practices and communications authentically reflect your environmental values ​​and commitments.
