Greenwashing hurts brands more than it helps, new global study finds

New Delhi: Exaggerating or faking "green credentials" can lead to a drop in brand value by damaging the trust of consumers and discouraging sustainable shopping, a study by the Indian Institute of Management (IIM), Lucknow, has found.

The research explored how deceptive green marketing, also known as "greenwashing," can create a negative impact on consumer trust, brand perception, and buying behaviour.

Conducted in collaboration with researchers from the University of Hail, Saudi Arabia, University of Turin, Italy, Princess Nourah bint Abdulrahman University, Saudi Arabia, and Institute of Management Studies Ghaziabad, India, the research has been published in the journal, Business Strategy and the Environment.

According to officials, greenwashing has become a common practice among brands to attract consumers, build a positive perception, and manipulate buying behaviour.

Unlike earlier studies conducted, which were not able to assess how it can affect consumer attitude towards a brand, the research team bridged this gap by studying the psychology of how consumers interpret and react to greenwashing, they said.

The team developed a framework using Attribution Theory and the Elaboration Likelihood Model. This framework, with an emphasis on "situational involvement," meaning the degree of personal relevance a consumer assigns to environmental issues, helped in analysing "why" and "how" people react to greenwashing.

"The research team tested the developed framework on 353 consumers from the United States of America and analysed the data using structural equation modelling, a method mostly used in the social and behavioural science fields," said Sushant Kumar, Assistant Professor, Marketing Management, IIM Lucknow.

Kumar said that the study found that greenwashing does not just fool people; it also damages brand trust and discourages sustainable shopping.

"Greenwashing is dangerous for brands, but consumers appreciate green claims. A business' green claims should be substantiated by evidence that can be verified by consumers. When consumers grow sceptical about a brand exaggerating or faking green credentials, their positive feelings about the brand drop," he said.

"People with greater environmental knowledge are more likely to critically assess eco-claims made by the brands and react more strongly," Kumar said.

The team now plans to explore several other aspects of consumer behaviour, such as the recommendation of a brand or product involved in greenwashing. The team also plans to study the consumers' sentiments while consuming green brands and later discover false claims by the brand.