Labelling a product “eco-friendly,” “natural” or “green” with no evidence that it’s any of those things. Putting a green leaf on a product that is far from “green.” Saying a product is recyclable when no local recycling facilities exist. These are all forms of greenwashing, explains Dr. Arka Mukherjee – making brands seem more sustainable than they really are.

“Essentially, greenwashing misleads consumers,” explains the associate professor in the Department of Decision Sciences. “The goal is to gain a competitive advantage through false labelling or misleading advertising that claims a product is more eco-friendly than it really is.”

With support from a National Sciences and Engineering Research Council of Canada (NSERC) Discovery Grant, Dr. Mukherjee is using mathematical modelling to analyze greenwashing behaviours in business.

In one of several studies, Dr. Mukherjee used a mathematical model to examine what would happen in a market with two main firms competing based on the environmental quality of their products. If one firm was greenwashing its product, would the other firm be inclined to do the same to keep up with the competition? 

The results were surprising. In a market where greenwashing was allowed, the model showed that the product’s environmental quality actually increased. 

“It’s like saying that by allowing them to cheat, they will do better with the environmental qualities, which is very counterintuitive,” says Dr. Mukherjee, who adds that there are plans to expand the research with real data to test the theoretical model.

Another aspect of the paper looked at penalties. “When the chances of getting caught are high, it reduces the propensity of firms to greenwash,” explains Mukherjee. 

But imposing a very high penalty isn’t necessarily a good thing. Make the stakes too high, says Dr. Mukherjee, and it can take a company out of the market entirely. 

From a policy perspective, he hopes the research can inform decisions and penalties, including those that come from Bill C-59’s strict anti-greenwashing regulations. 

“This research provides a broader context that can provide good insights about how to regulate greenwashing,” says Dr. Mukherjee.

How to buy green – what’s a consumer to do?

Dr. Mukherjee says that most consumers, himself included, aren’t likely to take on the daunting task of tracing products back to their source, seeing how companies invest and which supplier they use. 

“But if you are trying to buy a green product, there is a responsibility that comes with that. Look for companies with good brand images and reputations that only produce green products and have done so for a long time. Otherwise, you could end up paying for a brown product for the price of a green one.”

Watch the full episode where Dr. Mukherjee digs into his research on the impact of competition on corporate social responsibility communications and product recalls.