Page 49 - Banking Finance December 2023

ARTICLE

G reenwashing refers to the practice of making those same hotels did little to help the environment and that
misleading or false claims about the
the towel request was an act of greenwashing.
environmental benefits of a product, service,
company, or practice in order to appear more
environmentally friendly than they actually are. This term Why Do Companies Engage in Green-
is often used in the context of marketing and advertising, washing?
where companies try to capitalize on the growing consumer It's simple - being seen as ethical drives profitability. A report
demand for sustainable and eco-friendly products. by McKinsey found that Gen Z (people born roughly between
1996 and 2010) are more likely to spend money on
The term greenwashing was first coined in 1986 by companies and brands seen to be ethical. Another, Nielson's
environmentalist Jay Westerveld in an article where he Global Corporate Sustainability Report, found that 66% of
decried the common practice of hotels asking guests to reuse consumers will spend more on a product if it comes from a
towels to help conserve energy. Westerveld claimed that sustainable brand, and that jumps to 73% among millennials.
Therefore, companies have a financial incentive to be more
socially conscious, or at least appear to.
About the author
Some greenwashing is unintentional, due to a lack of
Piyush Kumar Jha
knowledge or understanding on the part of management,
Chief Manager (Faculty)
ULA- Risk Excellence, but sometimes greenwashing is also carried out intentionally
Union Bank of India through marketing efforts. Companies engaged in
Mangaluru, greenwashing might use vague or ambiguous terms,

44 | 2023 | DECEMBER | BANKING FINANCE