When “Green” Isn’t: The Law Behind Corporate Greenwashing

Companies now compete on sustainability the way they once competed on price. That makes it worth exploiting. Some businesses want the goodwill of looking green without doing the expensive work of actually being green-  a gap that environmentalist Jay Westerveld named "greenwashing" back in the 1980s, when he noticed hotels asking guests to reuse towels "to save the environment" while doing nothing to cut their own costs elsewhere.

The tactics are predictable once you know to look for them. Vague words like "eco-friendly" or "sustainable" show up on packaging with no measurable claim behind them- no percentage, no standard, nothing you could fact-check. Say "sustainable" enough times, and it starts to function less like a claim and more like a mood. A brand highlights the one plant it planted while its supply chain quietly drives deforestation somewhere the annual report doesn't mention. A logo that looks like a certification seal turns out to be one the company designed itself, printed in the same green ink real certifications use, sized just large enough to catch a glance in a grocery aisle but not large enough to invite a closer look.

None of this requires lying, exactly. A company can be technically accurate about the one good thing it did and still leave you with a wildly inflated sense of its overall footprint. That's the trick;  it's not fabrication, it's framing.

Some of this is getting harder to pull off. Journalists and researchers have gotten better at catching it, and a few high-profile lawsuits have made marketing departments noticeably more cautious about what they'll put on a label. Sustainability reporting is slowly getting more standardized, too- net-zero pledges and climate disclosures that used to be rare are now closer to the norm, and investors increasingly expect a company to show its work rather than just assert good intentions. Third-party certifications give at least some independent check on a company's claims, assuming the certifying body itself isn't compromised, which is its own can of worms.

But almost all of it is still voluntary, which means it's still mostly self-graded. A company that wants to exaggerate can usually find a framework loose enough to let it, or simply choose not to participate in the stricter ones. Reporting standards that aren't mandatory tend to attract exactly the companies that don't need them and repel the ones that do. Closing that gap isn't a job for better PR ethics or more media scrutiny; it needs binding disclosure rules with actual penalties attached, the kind that make exaggerating a legal risk instead of a marketing decision.

From Guidelines to Enforcement:

Greenwashing-the practice of making false or misleading statements about a product’s or company’s environmental benefits- carries severe reputational, regulatory, and financial risks for businesses.

Currently, tracking platforms have connected numerous companies globally to combine misleading and environmental-related incidents within a single annual cycle, with major multinational corporations facing formal public or regulatory crackdowns annually.

While in India, a study on the Indian corporate landscape found that 47% of sampled companies exhibited characteristics or disclosures linked to greenwashing, primarily concentrated in the manufacturing and energy sectors.

Earlier, the Central Consumer Protection Authority (CCPA) had issued the Guidelines for Prevention of Misleading Advertisements and Endorsements in June 2022. However, these guidelines talked about concerns regarding general fraud and false celebrity endorsements, and lacked specific technical mechanisms to assess or enforce complex environmental claims.

Recognizing the regulatory gap, the Department of Consumer Affairs constituted a multi-stakeholder greenwashing committee in November 2023. Following the collaborative meetings, the CCPA released a draft framework for public review on 20th February, 2024, which received inputs from 27 stakeholders.

Following the modifications from the feedback, the final guidelines were formally notified on 15th October,2024 (CCPA Guidelines for Prevention and Regulation of Greenwashing, 2024), under the Consumer Protection Act, 2019, which also established India as one of the few global economies with a concrete legal apparatus targeting greenwashing. Under the guidelines, businesses now must verify their public messaging against substantiation and verifiable evidence, eliminate buzzwords, follow digital transparency, and ensure that detailed digital access (QR Codes/URLs) is integrated into the advertisement or product packaging, and aspirational or futuristic statements are illegal unless backed by a documented, clear, and actionable implementation plan.

The Consumer Protection Act (CPA), 2019 handles greenwashing through its broader prohibitions against unfair trade practices (sec.47) and misleading advertisements (sec.2(28)).

Further, under section 18 of the CPA,2019, the CCPA is empowered to protect, promote, and enforce consumer rights as a whole, under which the CCPA enacted the Greenwashing Guidelines,2024, while sec.21 gives power to the Central Authority to issue directions and penalties against false or misleading advertisements.

Beyond the CPA other regulatory bodies have moved to address greenwashing in their respective domains. The Advertising Standards Council of India (ASCI) has also established specific guidelines governing environmental or green claims in advertisements which addresses several categories of environmental claims or credentials including absolute and comparative claims, general claims that look at the full lifecycle of a product, and future environmental promises.

Greenwashing risks also arise in the securities market, where companies raise capital through instruments marketed as ‘green’. Here Securities and Exchange Board of India (SEBI)’s framework governs green debt securities which contain requirements (such as use of proceeds, project evaluation, independent review, and impact reporting)  intended to reduce the risk of greenwashing. Ahead of this, the framework has subsequently developed beyond, with SEBI introducing Environmental, Social and Governance (ESG) debt securities and Business Responsibility and Sustainability Reporting (BRSR) framework.

To conclude, while today’s trends and choices lean towards sustainability, businesses too follow the direction of preferences of the consumers. However, the question that arises is whether their direction is true to what they claim to be. The concern of greenwashing is not a permanent end, but a continuing concern as the world progresses. What we must question is whether businesses will proactively meet the substantiation standard, or wait to be forced into it by CCPA enforcement.