By understanding how environmental awareness is growing, we can understand how consumer and governmental expectations are gearing the market towards more sustainable business practices. Knowing the premise and impact of implementing green marketing strategies can make a world of difference to your organisational success.
Consumers today are a much more discerning group. The concept of sustainability has transitioned from a peripheral advantage to a fundamental criterion in consumer-brand relationships. As a result, businesses that produce environmentally friendly products or incorporate sustainable business practices must also master the art of marketing these effectively and in line with local marketing regulations.
In a time where environmental advocacy is an expectation, businesses need to communicate their environmental efforts in a responsible and credible way.
How is environmental awareness growing?
Over the years, consumers are showing growing interest in environmentally friendly products, making green marketing an important and worthwhile part of any business strategy. Why is that the case?
We can look at the statistics supporting this shift in two areas:
One, public concern and interest in the environment has significantly increased. Based on a report by the Economist Intelligence Unit (EIU) commissioned by the World Wildlife Fund (WWF), which spans 54 countries holding 80% of the world’s population, concern has risen by 16% and continues to grow. Termed ‘eco-wakening’, it is strong in not only high-income countries, but significantly so in developing countries.
Second, consumers are actively demonstrating their concern by gravitating towards or transitioning to brands that prioritise sustainable business practices. In the same report, it is noted that demand for sustainable goods has increased especially in high-income countries, with Google searches for sustainable goods having increased globally by 71% since 2016. This trend can also be seen in emerging countries.
According to the World Economic Forum, around 70% of people aged 16 to 25 have reported climate fear and anxiety. As this group continues to increase their purchasing power in the coming years, there will be a major shift in consumption patterns, which means sustainable business practices will soon be considered a fundamental prerequisite for purchasing decisions. Brands that want to continue reporting sustained and high growth need to factor sustainability into their business model.
How do governmental policies affect sustainability practices such as green marketing?
Governmental policies play a pivotal role in steering both the market and corporate strategies towards sustainable development.
For example, recognising that climate change and environmental degradation are an existential threat to Europe and the world, the European Commission has introduced a series of proposals aimed at revamping the European Union’s policies on climate, energy, transport, and taxation. Termed the European Green Deal, the goal is to achieve a minimum 55% reduction in net greenhouse gas emissions by 2030, relative to the levels in 1990.
Increasingly, as governments worldwide enact regulations aimed at accelerating the green transition, businesses are finding that environmental compliance is about adapting to a new market reality. These policies influence corporate behaviour, creating an environment that either encourages or mandates the adoption of sustainable business practices, from setting regulations to combatting greenwashing. Here are some examples of this:
Setting standards and regulations
Governments can enforce regulations on environmental protection, energy efficiency, waste management, and emissions. These push businesses to invest in green technologies and build sustainable business models.
Providing incentives and subsidies
Incentives such as grants for green energy projects or product development encourage businesses to shift their business model to a greener one. Financial incentives make it economically viable for businesses to invest in green practices.
Encouraging transparency in reporting
Implementing policies that require businesses to report on their environmental impact and sustainable practices promote transparency.
Addressing greenwashing
Strict guidelines and penalties for misleading environmental claims protect consumers from deceptive green marketing practices.
Governmental policies not only mandate and incentivise sustainability, but they also inadvertently shape consumer behaviour towards supporting genuinely sustainable businesses.
How are consumer expectations shaping the market for sustainable business practices?
In a joint study by McKinsey and NielsenIQ, it was reported that products making ESG-related claims averaged 28% cumulative growth over the past five years, in comparison to 20% for products that made no such claims. This demonstrates that a substantial segment of the market values environmental, social, and governance (ESG) considerations, influencing their purchasing decisions.
Additionally, trends seemed to indicate that products that came with green marketing claims were not limited to niche audiences based on purchasing power or demographic. This observation suggests that sustainability is becoming a mainstream concern, with consumer expectations widespread across different demographic segments.
In the same study, it was noted that products making ESG-related claims have achieved disproportionate growth. Understandably, with more products entering the market with green marketing claims, the verifiability of these claims will become crucial. Discerning consumers will seek evidence supporting green marketing claims made by brands, putting pressure on businesses to get their communications right.
What is green marketing and why is it important?
Green marketing is the primary channel through which both new and repeat consumers navigate their choices in purchasing green products. As the medium that educates, informs, and persuades consumers, a credible green marketing strategy is important for building trust with consumers.
Going green is the first step. Communicating it credibly is second. When businesses invest in responsible green marketing, they benefit in several ways:
1. Competitive advantage: By aligning with growing consumer demand for environmentally friendly products and services, businesses gain a competitive edge. This differentiation in the market is about aligning with a broader, more sustainable growth trajectory that resonates with conscious consumers. This positioning ensures that the business is well-placed to thrive in an increasingly environmentally aware marketplace.
2. Customer loyalty and advocacy: Commitment to environmental responsibility fosters a strong sense of loyalty among consumers, particularly those who prioritise climate and environmental issues. Demonstrating genuine concern for the planet improves brand reputation and cultivates a dedicated customer base. These consumers are not just loyal, they become brand advocates, driven by the knowledge that their purchases support a business that reflects their personal values and commitment to the environment.
Let’s look at the research on consumer trust from the 2023 Edelman Trust Barometer. 71% of consumers say that it is more important to trust brands they buy from today, than in the past. This situates trust as a significant consideration for brand purchase.
In the trust economy, consumers are also 59% more likely to buy products they trust and 67% more likely to remain loyal. When this trust is broken by misleading or unsupported environmental marketing claims, the consequences are profound. Such breaches go beyond mere drops in sales; they undermine the confidence consumers can place in responsible marketing communications and hinder the collective efforts required to address climate change.
What does greenwashing mean and why does it happen?
Greenwashing is the practice of overstating or falsifying the green credentials of a product, service, or brand. It includes omitting information, either deliberately or not, which leads to misleading claims and ads.
While most businesses are sincere in demonstrating their commitment to environmental efforts, their green marketing claims may miss the mark at times, oftentimes leading to a gap in truthful communications. Green marketing claims, also known as environmental claims, refer to statements, symbols, images, or graphics that convey an environmental aspect of a product, component, package, service, or a company’s business operations. However, when these claims convey a false impression or misleading information about how a company’s products are environmentally friendly, or cannot be verified, it can be seen as greenwashing.
Broadly, environmental claims are either directly stated or implied in advertisements.
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Implied claims
An implied claim aims to connect a product to the environment by sound, colours, images, or symbols. This includes the use of eco-friendly logos and labels not associated with an accredited organisation.
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Aspirational claims
Businesses may also advertise their environmental-related goals and ambitions for a more sustainable future through aspirational claims. Using claims such as ‘carbon-neutral in ten years’ or ‘moving away from fossil fuels in 5 years’ require a clear plan of action to demonstrate how their business model will achieve the stated sustainability goal.
Problematic environmental claims can be attributed to various reasons, including:
- Businesses overcommitting or overpromising on their environmental efforts by making green marketing claims that are not entirely accurate or backed up with sufficient evidence.
- Businesses are unable to adequately describe, or sometimes purposely omit, some of the steps they have taken to improve their environmental impact, leaving consumers unsure of how genuine their efforts truly are.
- Businesses may struggle to explain how complex scientific processes and technologies translate into tangible benefits for their products, leading to vague or generic claims.
Misleading consumers, even unintentionally, can have significant consequences on a business’ reputation. It can also lead to regulatory scrutiny and accusations of ‘greenwashing’, ultimately hindering the mission towards a more sustainable future. However, it is also important to note that communication promoting a low carbon footprint, or a zero-waste approach is not, by default, considered greenwashing.
As going green is a relatively new shift in consumer behaviour, many consumers are still unfamiliar with the terminology in environmental compliance and verifying sustainable practices in business. When promoting green products, it’s crucial for businesses to consider the sort of green claims they are making and balance that with their consumers’ awareness regarding the specific environmental issue.
Taken from our Certificate in Responsible Green Marketing Communications course.
How do you avoid greenwashing?
Not only does greenwashing compromise the trust consumers place in businesses and harm the fight against climate change by diluting the efforts made to slow it down, it also increasingly comes with legal ramifications.
In 2024, the EU Parliament signed off on an anti-greenwashing legislation, with a new directive that outlaws the use of terms such as “climate-neutral” and “eco-friendly” without clear and credible supporting evidence. This new legislation makes it imperative for businesses to properly understand how to deliver truthful and substantiated green marketing campaigns.
To offer additional guidance for businesses employing green marketing strategies, the Certificate in Responsible Green Marketing Communications (RGMC) is designed to provide clarity between truthful, substantiated green marketing claims and false statements that may lead to accusations of greenwashing. Based on the principles of the ICC Framework for Responsible Environmental Marketing Communications, the online course shows you how to effectively qualify and substantiate your 'green' marketing claims using examples of real ads withdrawn by regulators.
Growing global concern for the environment is pushing businesses into the sociopolitical space. It’s no longer sufficient for businesses to only offer high-quality products and services. Rethinking and integrating sustainability throughout every facet of the business, from operations and product development to marketing communications, has become imperative. Green marketing then becomes a key element of commercial success, by signalling a brand’s commitment to sustainability and demonstrating how they are meeting growing consumer demand for responsible business practices.