Impact Podcast | Greenwashing, greenhushing, and the truth behind corporate environmental claims

KANINA BLANCHARD (KB)
Exclusive insights, actionable strategies and ideas that ignite change. You're listening to the Ivey Impact Podcast from Ivey Business School.

JULIAN BIRKINSHAW (JB)
Hello, and welcome to Dialogue with the Dean, the flagship series on the Ivey impact podcast. I'm Julian Birkinshaw, Dean of the Ivy Business School. In this series, I speak with Ivey's leading faculty to explore the research shaping business and society today. From sustainable packaging to net zero pledges, environmental branding is everywhere. But how much of it is real and how much of it falls under what experts call greenwashing, claims that mislead us into thinking companies are more environmentally responsible than they really are. Corporate greenwashing has become one of the most pressing and pervasive challenges in the sustainability space. My guest today is someone who's helped put this issue on the policy map. Wren Montgomery is an associate professor of sustainability at Ivey and holder of the J.J. Wettlaufer Faculty Fellowship. Her research has influenced Canada's Competition Act reforms, and continues to shine a light on how companies communicate and sometimes obscure their environmental performance. In this episode, we'll explore why greenwashing matters for business, society, and consumers alike. We'll also discuss a new and more subtle phenomenon greenhushing, where companies downplay or stay silent about their environmental actions. Wren welcome to Dialogue with the Dean. It's a pleasure to have you here.

WREN MONTGOMERY (WM)
Thank you so much for having me. I'm delighted.

JB
Good. So we'll start, as we often do, with just a little bit of your backstory. What brought you to Ivey in the first place? 

WM
Great question. So, I like to think I'm the epitome of cross-sectoral experience. So, out of undergrad I worked in the finance industry down on Bay Street. I was there during that tech, boom and crash. So very exciting time to be there. But I had been thinking about starting my own business, so I went back to do an MBA, worked in consulting for a little while out in British Columbia and, and then came back, to do a PhD, which had always sort of been niggling at my, it'd always been in the back of my mind something I wanted to do, yeah. 

JB
What was your PhD, you topic then? 

WM
So, I was looking at water access and affordability, sort of water justice. I was very interested in field change, but also interested in the intersection of social environmental sustainability. And so then I was looking at privatization, and I was, I with hate to use the word lucky, but fortuitous and finding a really, dynamic, I think, context for my dissertation work. I was interviewing people in Detroit, because they were thinking of privatizing the water system there, and they ended up, they started cutting off the water to tens of thousands of people. It became a huge, a global issue. There was global press there. The U.N. came in, declared it a human rights issue. So that was my dissertation work. 

JB
You were looking at the ways in which people were mobilizing around sort of challenging the, the policies of the time. 

WM
Absolutely. So I was really curious about privatization of, you know, public, amenities, resources, things like that. But also, of course, the pushback and that mobilization. So it ended up being a paper sort of about custodianship, about people taking care of the public resource.

JB
Were they able to get some sort of positive results in terms of getting the....

WM
They did. Absolutely. They got the water turned back on, which was the immediate thing, stop the shut offs in the short term, but got a number of sort of payment plans and income affordability plans put in place and things like that, which really became a model for a lot of things that followed around the US in terms of more affordable, water services

JB
And then I was looking back through your CV. You had a paper in 2013 called Tweetjacked, the impact of social media on corporate greenwashing. Obviously we're going to get into corporate greenwash. But I guess that was fairly early on in the days of sort of tweeting having an influence on policy. 

WM
It was it was a special issue in that journal on social media, so it was like this new thing...

JB
And did your prediction come to pass? In other words, I think you were sort of predicting that somehow because social media was so instantaneous, it might have, a sort of a positive effect actually, on companies sort of doing the right things. Is that is that right?

WM
Yes, we did. We did we were we were certainly too optimistic in a follow on paper, which has been really well cited, our definition of greenwashing and, of paper that followed that. It's actually, we called it the means and end of greenwashing. So we're kind of talking about that greenwashing might be stopped by some of these things that a lot of people were very optimistic. 

JB
No indeed Yes and yes, tweeting or X'ing whatever you call it nowadays, has taken on a life of its own. 

MUSICAL BREAK

JB
So let's get into greenwashing. So give us a almost like a dictionary definition just to make sure we're all on the same page. What what do we mean? What does greenwashing look like?

WM
So we're really thinking about these, companies or can be any organizations, we say organizations giving this overly positive impression of what they're doing around the environment. So their products, their processes, services, etc.. So, you know, people who were trying to do the right thing by something say, hey, you know, I want to put my money, you know, where my values are to help the planet. And this product looks green, but they're being misled. 

JB
But obviously the shades of misleading by companies. I mean, every company of course is a is marketing itself in the best possible light. And somehow you're saying that there's a spectrum where just sort of selling up what you're doing in a positive way to bleeds into actually giving false impressions of sustainability or environmentally friendliness, which are not substantiated. Is is that right? 

WM
Yeah, absolutely. And, this comes out of, you know, research, but also out of the Federal Trade Commission and places like that in the US where they're finding especially green products, of course, they have misleading, you know, false advertising laws already, but that there's something special that often happens around green products. They have a really strong halo effect. So people will see one claim and think, oh, this also, you know, uses wind energy and all sorts of other things. 

JB
Just give us an example. And you don't want to use the company name. Perhaps you because so many of these are in the public domain. Give us a couple of examples of famous examples of, of greenwashing where ultimately it was clear that this is a company that had had crossed the line. 

WM
Yeah, definitely. So, ones that are often held out of, of course, Volkswagen. So it was sort of this clean diesel. Yeah. And they were advertising that as a much cleaner product. Of course, we all know what happened there. It came out, it was anything but clean and there was outright fraud involved in that. 

JB
And that resulted in criminal proceedings? 

WM
Absolutely. So, one we use in class Harvard case, which was Fiji Water, which was infamously, had a lot of, you know, promises they were making to people about the pristineness of the water. And, you know, how it was produced. It turns out there are all sorts of labor issues, of course, shipping that water. So they were called out publicly for greenwashing a number of times. 

JB
Did they also face penalties as a result? 

WM
Certainly from the public. And it's interesting because the case is getting a little old now, and it still incenses students and they get very upset about it in class. So one of the things I love about this that students are so passionate about, about hypocrisy, and they really once they kind of learn to find it, they find it everywhere. I get emails all the time about, did you see this one, Professor Montgomery? 

JB
Good. So you've got a paper recently? Accepted for publication. I got No end in sight: A greenwash review and research agenda. I took a quick look at it. I mean, just sort of taking quite a big look at how greenwashing is evolving. Just just take us through that, because obviously, we've gone through a number of periods of companies doing things and being called out and perhaps their practices evolving. 

WM
Yeah, absolutely. So, this one was actually, a couple of years ago, it came out, and it's gotten a fair amount of recognition, which has been wonderful, but we were really looking at a lot of the greenwash research and we thought, okay, it's been about a decade since we had that original review that really took off and I think created a foundation for a lot of the research. But, we're thinking things have changed. So why why were we wrong? You know, in that first paper is really what we were looking at in this. And we thought, well, greenwashing is really shifted a lot. So, so it started, which we call sort of greenwash 1.0 with this, consumer focus. So, you're going to get that eco friendly, label on your dishwashing detergent or something like that, maybe some trees, the poor maligned bee. And we find if there's a bee on something, you know, it's almost undoubtedly a lie. So, yeah. But, you know, and and there's obviously some concern somebody is being fooled. They got a less you know, clean dishwashing detergent than they thought, you know, and so there's some but, you know, it's not a huge societal concern. Maybe. But then we saw corporations shifting to what we're calling greenwash 2.0. So I joke with my students, they thought, hey, this worked so well, we were able to fool our consumers. Let's fool some more stakeholders. But it's a bit more complicated than that, of course. But we see this expansion of greenwashing to employees. We hear this all the time with our students. When they're going out on the job market, they're like, I don't really want to work for a responsible company. All of a sudden, everybody who comes to recruits is incredibly responsible. So they're telling students that, there's, you know, greenwashing to investors. Of course, we know all about ESG and kind of the explosion around that. And some of it was not verified. And then greenwashing to governments and there's really good research on this. A lot of industry associations or individual companies are saying, oh, no, we're taking care of that. Look, we're really responsible. We're going to be net zero. So the government doesn't step in and regulate, so it defers or deters regulation. 

MUSICAL BREAK.

JB
So why does it, if I'm going to a little bit skeptical, how big a deal is this really? We want companies to try to do the right thing. Some of them do a better job than others. It's surely a good thing that people think that this is something they should be doing. And the more actually environmentally friendly practices, the better. If some people are claiming things that aren't quite true. Not a big deal. What's your response to that? 

WM
Yeah, absolutely. And I'm, you know, I tend to be somewhat flexible if companies are actually actively learning. There are there mistakes you make, you know, even if you're really trying to legitimately do the right thing. So, I've tried to make sure a lot of the work I'm putting out there is really accessible for managers and helping them move through that. Where I think the rubber really started to hit the road was, you know, within the last five or so years and why greenwashing has exploded all over the media is we saw this greenwashing 3.0. So are we talking about 1.0, 2.0, 3.0 where we saw, companies being called out for greenwashing. If you're greenwashing in the present, I can find that out. Might take me some work. But if I'm, you know, an inspired NGO or lawyer or a regulator, I can figure it out. But if I'm greenwashing in 2050 or 2030. So if I'm saying I'm going to be carbon neutral by 2030 or 2050, it's much harder for me to figure out. And so we saw this explosion in that, and good estimates are saying about 50% of products are greenwashing. These are out of the, the EU, the EU itself, their research saying about 50% of products. But with net zero, I've seen estimates as high as about 75% of claims are net zero. So governments were really worried about that. And I think and you know, the public and, and all sorts of commentators, the media, so I think that's really where we saw this huge pushback happening. 

JB
Let me see if I understand. So you're saying that companies and Ivey's got a net zero goal, on scope one and two emissions by 2034, I, we have a plan to get that. I'm very comfortable that we will hit that. But you're saying a lot of these net zero claims, are just sort of random statements of intent that there is no foreseeable way by which they could actually achieve them. And that's where you you start to get concerned.

WM
Absolutely. And I've, I, you know, I've heard from people, lawyers who are working in the rooms with these people who say, I've seen them go, oh, well how about 2030? No. Well how about 2025? Like it's it's just kind of random, right? It's, you know, a marketing or a PR exercise.

JB
And if its far enough off and that's fine. I thought then obviously, yeah, people will claim, well, you know, innovation will take care of it. And sometime in the next 20 years it it'll work its way. So you're saying that's not that's not good enough.

WM
Well I and I think this is where we get to the point where society became very concerned and governments become very concerned. Is that's delaying our action on climate change. Right. If we think, hey, look, all these companies are going to be net zero, problem solved. Right? And so you know, it, it reduces the public pressure. It reduces the pressure on politicians. So, the UN has said greenwashing is sort of the biggest, problem impacting our ability to take action on climate change. So yeah. Yeah, the Secretary-General made that statement. 

JB
Because we're just all claiming it'll all be fine because we've got these plans. It's an empty statement. 

WM
Yeah. So the public can go, hey, I bought some more net zero jeans or yoga pants or whatever it is, and I'm good.

JB
And is presumably one of the other challenges, you touched on this, is that, sort of bad, bad behavior drives out good behavior. In other words, if everyone claims it, then the people who were actually, the companies were actually trying to put serious investment into it, say, well, why should I bother? Is that is that happening? 

WM
Absolutely. So this is my biggest concern really. You know, and being in a business school, I think it's our job to, you know, support companies that are doing the right thing and help them help them do that better. But if you look at those stats, you know, 50% of companies greenwashing, that means 50% of the companies actually have a product that they verified that it's, you know, having a positive impact. They can substantiate those claims. And those are the companies I want to support. And, you know, if we think, you know, even Milton Friedman said, you know, markets need information. And so greenwashing is obscuring the information that the market's getting. So a consumer or an investor wants to buy a green product, doesn't know which one it is. 

JB
So, and it's not just you because we've got plenty of Ivey faculty in this area but we all you know sometimes calling out companies for greenwashing. But at the same time you are also advising companies, on how to do this better. So what what advice do you give to companies says, you know, I want us to do the right thing. I realize it's just a, a really complicated, messy sort of market for information, and it feels like I shouldn't even be bothering to put so much money into this, because I'm not going to be rewarded for it. So how do you how do you advise companies to, to, to, to overcome this messy, noisy market for information? 

WM
Yeah. Well luckily I'm writing a whole book on that. That's called Beating the greenwashers. 

JB
I was going to ask you... 

WM
Might as well jump right into that. We're really aiming that to the company trying to do the right thing. Trying to compete though against greenwashers in their space. You know, whether you're a, you know, renewable energy company or you're a startup, you know, Canadian sustainable fashion company, there's millions of or not millions or many of them, and they're really struggling against greenwashing out there. So, a number of things.. First of all, education is the first thing. So that's one of the reasons I've really thought, you know, I'm doing this research. It's at Ivey. Let's get it out to the public. We're a public university. So really trying to be on the media, be on small podcasts, be on student podcasts, speak with students, anything I can find because a lot of companies just don't know. So I think that's one of the huge barriers that give people all the information. So they're not accidentally doing it. And, and I think that actually gets rid of quite a bit of it. Certainly the accidental type. Next we're talking about really look in the mirror because I think, where we see a lot of greenwashing that isn't yet regulated. It's something called selective disclosure, which there's been a lot of research on. So companies really doing something quite legitimate in one space, but then leaving out some other practices in the company. And so that's where we saw Apple Watch. Apple got called out, heavily for this about a year and a half ago or so, this Apple Watch campaign, it was beautiful. They had, an Academy Award winning actress as Mother Earth, telling them what a good job they were doing. And it became this huge greenwashing scandal. But they were doing a lot on that one product. But they were leaving out some things that our students will always bring up in class. Foxconn and some employee issues and of course, the, the consumerism and the turnover of products and things like that. So I think making sure companies are just aware of what's happening throughout the whole company, because if you're just making claims about one hero product, you're getting in trouble. And then just really starting to, as you were saying, clean up those, those reporting plans, making sure you have a concrete plan to get somewhere, etc..

MUSICAL BREAK

JB
Which leads us then to greenhushing. Everybody can see what's happening in the US right now. Most of us find it a little bit objectionable. Everyone's got their own views, but I think it is safe to say that companies are not being held to account under the current administration in the US in the ways that they probably were under the previous government. And so we're starting to see some companies actually pull back from some of their commitments around EDI, around ESG, around social and environmental things under direct pressure. Tell us how this then impacts on the way that you're researching it. Greenhushing means essentially what we're continuing to do the things we are talking about, but we're not talking about it so much.

WM
Absolutely. Yeah. So we're talking with greenhushing, and often called brownwashing in the literature for anybody who wants to, to look it up, and find it. But yeah, we're talking about companies who are legitimately doing something, you know, sustainable, green, etc., but have decided not to talk about it. And so in my recent research, I think it's the first sort of, empirical work with companies kind of looking at why they're doing this. So it's qualitative. We've got about 50 firms, really digging into why they're doing it. And so we used to think, you know, exactly what we're seeing in the media now, that greenhushing is a response to, external pressures. So it's stakeholders may not want you to be spending money on sustainability. Might be government pressures, might be activists saying, hey, you're pushing that, maybe you're greenwashing. And so you decide to be quiet because of these external pressures. What we found that I think's really fascinating in our research is that we had far more companies that were actually saying, no, we're greenhushing because there's so much greenwashing out there. That we don't feel we're getting the value from the market. We might be seen as just one among the many greenwashers. So they're actually greenhushing because there hasn't been enough regulation. 

JB
Again, just give us an example. It can be anonomized or real, but a company behind the scenes doing what they believe is the right thing in terms of in environmentalism and just not talking about it. Is that right? 

WM
Yeah. Yeah, absolutely. I always use an example, in class, of a wine, Sea Smoke in the US that is a very prestigious, you know, nice, Pinot Noir from the West Coast that we discovered and, they are organic, biodynamic, all sorts of things. Nowhere on the bottle, you know, for a long time wasn't even on the website. So it's just so a lot of companies will say, you know, it's just it can be political or there's too much greenwashing or we just, you know, want people to buy it because it's great wine. And this is how you make great wine by being sustainable. 

JB
A lot of supermarkets, obviously they have the organics or labeling or whatever. Are you saying in the case that they wouldn't even give it the label that I help the consumer to see that it's ...

WM
There's some of them that just don't even. Yeah, aren't even on that. Often some of the higher end ones, I mean certainly a lot of French wines are there's like, this is just the way we've grown up forever, you know. You know, it's a really high quality wine, right? Yeah. Right. Yeah. So it's interesting. But then you also have a lot of greenwashing in that space too. So some of those labels that you'll see on the shelf are not very credible labels.

JB
So and so these companies are betting that just doing what they believe is good business practice. Quality will win out essentially people, customers will just buy the product for what it is rather than because of labels. 

WM
Yeah. But they almost without fail the ones I talked to would like to be talking about it more. They just feel the, you know, there's been so much sort of co-optation greenwashing, misleading information that they feel it's too muddy out there and they're not just not stepping in.

JB
So to some extent every kind of business concept or idea or whatever there's always a sort of a fad cycle, you know, concepts come into play. And then gradually people figure out that the truth is a little bit more nuanced. And ultimately, we like to think that the sort of the right behaviors eventually merging often with government policy and regulation to help. So you've kind of follow this whole hype and reduction in interest and hopefully now are a step in the right direction. Perhaps that's an overly optimistic... 

WM
Yeah. I mean, yeah, we were overly optimistic ten years ago when I first started writing about it. So I would love to think it's all actually going to go away this time. Sometimes I joke about it being a game of whac-a-mole where we identify one type, and then you know, organizations will find another way of doing it. Certainly a lot of people are, you know, talking now about some of the things that we don't typically think of greenwashing if you're just pushing over production, over consumption or something like that, but you sure your product is really sustainable. We had a lot of students concerned about those Stanley Cups. It's a reusable water cup, you know. Great. Sure. They can go, you know, fill it up at our water fountains here at Ivey. Wonderful. We're saving plastic. But then there were these online social media trends where you should buy ten of them. So, you know, all of a sudden it's not the sustainable option if you own ten reusable cups.

JB
We are always navigating. It's baked into Ivey's mission statement, sustainable and a prosperous world. I mean, yeah, we are ultimately a business school. We teach capitalist principles, but we've also got to think about the impact on the environment... 

WM
I know many students are deeply, passionately committed about that. But, you know, the two, as you well understand, are in, you know, intimately interlinked. We can't burn up our planet and expect to still be making good returns. 

JB
We ultimately have to reconcile sustainability and prosperity. 

WM
Yeah, yeah. And we've done a very bad job of that. 

JB
But you know, and I've said this many times, but Ivey is actually well placed to take a, a proper role here because we've got a huge faculty working the sustainability. 

WM
We do I think I think yeah bigger than anywhere in the world. But I know but I think we're really leaders in this space.

MUSICAL BREAK

JB
So a couple of short questions to end up. I mean, first of all, your students, you touched on this, obviously this is stuff we teach to our students, but what's the message you're trying to sort of give to the students about how they can then take this learning forward in their business careers?

WM
It's so tricky for us all now with AI and how things are shifting and how their careers are shifting. But, you know, I think one of the things we see again and again that is not going away is critical thinking. And so that's what I'm always trying to do is give them tools. So hopefully they can think thoughtfully about some of the things around them, some of the choices they make, whether it be where to take a job, what they buy, where to invest, but also as a manager because they, we know go to, senior leadership positions in companies. How do you make sure your company is actually being honest with its stakeholders? I always say lying to your stakeholders is not a good way to do business. You know, it's going to eventually it's going to eventually come to get you. Right. So, but how do you make sure you're not doing that or somebody else in your company is not accidentally doing that?

JB
I want so one last question and really just we've had a great conversation. Is there one big takeaway that you'd like to leave our listeners with? Of all the things that we've said, any one highlight in terms of them going about their daily lives as executives, as consumers. 

WM
Yeah. I there's probably something more profound, but I'd just say, be honest. You know, I think it's really the place we're being in, we're in where people are feeling they're so misled, don't trust claims various claims companies are making things like that. And, you know, I think for our students in your personal interactions, it will never lead you astray. But certainly in your business interactions as well. 

JB
We teach a lot about leader character here. And integrity is at the heart of that, right? Just owning that and trying to help people to take that seriously is a big part of what we're trying to get at. 

WM
And as I say, you know, lying or misleading your stakeholders or your network or anything like that, it's never going to work out for you a long term. 

JB
Thank you very much.

WM
Thank you.

JB
You've been listening to Dialogue with the Dean from Ivey Business School. A big thank you to my guest, Wren Montgomery, for sharing her time and insights. And of course, thank you for tuning in. Until next time, goodbye.

KB
This was Dialogue with the Dean an Ivey Impact Podcast series. For more insights from Ivey, including thought leadership on critical issues and additional podcast episodes, visit iveyimpact.ca or subscribe on your preferred podcast platform. Thanks for tuning in.