As society becomes increasingly savvy about sustainability, more and more companies are being accused of greenwashing. The practice of greenwashing occurs when an organization conveys misleading information about its products, claiming to be environmentally friendly or to have a greater positive environmental impact than they actually do.
In 2019, over 8,700 Amazon employees signed an open letter to their CEO, Jeff Bezos, demanding the company take just action on climate change. Other major corporations like Volkswagen, Coca-Cola, IKEA, Nestlé, and Starbucks are among a growing list of companies accused of deceiving their employees and customers through greenwashing practices.
In the recent paper, Employees' response to corporate greenwashing, Associate Professor Jennifer Robertson of the DAN Department of Management and Organizational Studies and Associate Professor Wren Montgomery of the Ivey Business School, both at Western University, find greenwashing can have an impact on employees’ perception of their organization and could hinder employee retention.
Montgomery and Robertson revealed that among a sample of employees who were educated in environmental science or sustainability, greenwashing was positively associated with perceptions of corporate hypocrisy among all employees. These perceptions, in turn, were related to higher turnover intentions for employees who held a graduate degree in environmental science or sustainability.
“Our findings demonstrate that greenwashing can negatively impact employees’ perceptions of their organization, and, for those employees highly educated in sustainability, it can lead to them exiting their company,” said Robertson. “As we are experiencing a workforce that is achieving increasingly higher levels of education in sustainability issues, these findings are particularly salient.”
Throughout the study, the authors outline the practical implications of their research, stressing why organizations might be dissuaded from greenwashing:
- Greenwashing can negatively impact employees to the extent that they might consider leaving the organization and presumably by extension hurt corporate performance.
- It is possible that employees may publicize their employer's greenwashing activity as a retaliatory response, which could result in more harmful effects, such as product boycotting and incurred environmental sanctions and fines.
- An organization accused of greenwashing should demonstrate ways in which the company has altered its environmental communications and/or practices to be more authentic.
“We know that consumers, investors, and governments are more attuned than ever to exaggerated sustainability claims made by companies,” said Montgomery. “But many companies overlook a key stakeholder that is both more likely to know the truth about green claims and able to impact the bottom line – their employees.”