New Trends in Management Studies

1 The Concept of Greenwashing

The concepts of sustainability and social responsibility have received widespread attention as in the recent years from organizational circles. The documents of organizations, their statements, websites, annual reports, brochures, and advertisements demonstrate that relevant discourses that include concepts such as poverty, health, sports, education, environment, recycling, renewable energy, and being environmental friendly are frequently expressed. Project investments concerning these issues are mentioned. Moreover, many organizations prepare special reports on social responsibility, sustainability, and environment, and launch links on their websites and social media pages on these issues. Such activities lead to increased confidence in firms (Bowen and Correa, 2014). In this line, different questions such as the reasons for organizations to take such kind of actions weigh on researcher’s minds for a long time.

The strong tendency of organizations to adopt the given concepts has given a reason to conduct a number of studies on the issue. Most of these studies investigated the contributions of these concepts or practices – which are described as ‘trendy’ – for an organization, and some of them investigated their contributions to the world (Munshi and Kurian, 2005). These research studies have also initiated new discussions. Among these discussions, the concept of greenwashing has been drawing a great deal of attention in recent years and has been forming a basis for examining these ‘trendy’ concepts from a different perspective.

Before the definition of greenwashing concept, the reasons that paved the way for its emergence – such as the environmental developments that have been occurring around the globe – attract attention. At this juncture, the serious risk of global environmental pollution that threatens life is frequently mentioned. Particularly, in recent years, hazardous conditions such as global warming and greenhouse gas emissions, which cause environmental waste, have generated an important level of environmental awareness in the society. In the face of increasing environmental awareness, organizations are in need of responding to environmental incidents. In this direction, studies are conducted and budgets are allocated (Nakajima, 2001). There are arguments that indicate that this intense environmental friendly activities of organizations are not reflected in reality. Indeed, many organizations damage the environment even though they pretend to be environmentalist. The concept of greenwashing is at the center of behaviors of pretending as a green environmentalist.

The reviews on the concept of greenwashing from a historical perspective showed that the attention on the concept has started to increase rapidly after the year 1996. On the other hand, the literature dated before the year 1996 included a very limited number of studies conducted on the concept of greenwashing (Seele and Gatti, 2017). Greer and Bruno addressed the concept of greenwashing in their book titled Environmental Marketing (Mitchell and Ramey, 2011). After the publishing of their work, a significant increase had been observed in the number of studies conducted on the concept (Laufer, 2003). Despite the fact that there was an increase in the attention toward the concept with the given studies, it is difficult to find a widely accepted definition of the greenwashing concept and the many dimensions of the concept remain their uncertainty (Mitchell and Ramey, 2011). The interdisciplinary structure of the greenwashing concept emerges as the root cause of this uncertainty (Seele and Gatti, 2017).

The term ‘greenwashing’ is composed of the combination of terms ‘green’ and ‘brainwashing’(Mitchell and Ramey, 2011) and addressed from different perspectives in different sources. The literature review demonstrated that a number of studies addressed the concept of greenwashing as a part of the environmental issues and opened the concept to discussion from a narrow perspective (Seele and Gatti, 2017; Chen and Chang, 2013; Pearson; 2010). On the other hand, the studies that addressed the concept of greenwashing from a wider perspective do not limit the concept with environmental issues and expand the scope of the discussion by including problems related to social issues. Some studies discussed the necessity of examining the studies conducted on human rights ground in the scope of the greenwashing concept (Lyon and Maxwell, 2011; Munshi and Kurian, 2005; Hamann and Kopelus, 2004).

Mitchell and Ramey (2011), who define greenwashing as intentional action, consider the concept as a planned practice that enables to conceal the information concerning damages caused by an organization or to create a false image that portrays the organization as a green and environmentally friendly organization. In a similar way, Furlow (2010) describes greenwashing as the distribution of false or insufficient information to create an environmentalist image by deceiving the public.

The statements that are made by organizations on their general environmental performances to create a positive impression by adopting deceptive methods can be examined under the concept of greenwashing. The given situation stems from the behavior of an organization to hide the negative impacts of its activities on the environment and only presents the positive ones. This situation takes place in the literature as ‘selective disclosure’ (Lyon and Maxwell, 2011). Beyond selective disclosure, presenting something that is perceived normally as it is green is also included in the concept of greenwashing (Grant, 2009). Furthermore, advertising a product as it is environmental friendly despite its environmental hazards is also considered as greenwashing (Diffenderfer and Baker, 2011; Hoch and Franz, 1994).

There are also studies in the literature that address the concept of greenwashing at the firm and product level. It is argued that the greenwashing perspectives of these two levels are different from each other. While greenwashing performed on the product level is considered as a marketing strategy that aims to increase the sales rate of a certain product or service by exaggerating environmental benefits or concealing environmental hazards (Marder and Dodd, 2012), at firm level, the discussion is held on an institutional background (Marquis et al., 2016, Delmas and Burbano). In this line, the firm level discussions are attached more importance, and the given situation can be explained by the crucial importance of organizational statements that stem from demands, which have emerged as a result of developments of concepts such as transparency and accountability that gain increasing importance (Bromley and Powell, 2012).

Delmas and Burbano (2011) classified organizations as green and brown according to their environmental performances and as vocal and silent according to their communication practices toward their environmental performances. Starting from this point, the writers stated that an organization that performs greenwashing will be inclined to display two different kinds of behaviors as weak environmental performance and positive communication. Fig. 1.1 shows that in terms of their environmental performances, organizations are defined as brown (bad environmental performance) and green (good environmental performance). Organizations that have a good environmental performance and also establish a positive communication about their activities with the public are considered as vocal green firms, and the ones that do not establish any communication despite their good environmental performance are considered as silent green firms. On the other hand, organizations that have a bad environmental performance and lack of any kind of communication mediums are described as silent brown firms. Lastly, organizations that have positive communication with the public despite their bad environmental performance are described as silent brown firms.

Based on the given explanations, it is believed that addressing the concept of greenwashing only at marketing, product, firm, and consumer levels or in the framework of performance with a reductionist perspective would be partial. Indeed, the most important problem that occurs in terms of the conceptualization of the concept is relevant to the aforementioned point. An attempt to address the concept of greenwashing in a more comprehensive way brings about the need for putting it on an institutional background.

The underlying reasons of this situation showed that there are assumptions that imply that most of the firms adopt practices and discourses regarding social responsibility, sustainability, and environment as a way of obtaining institutional legitimacy (Prakash 2002; Campbell, 2007; Wæraas and Ihlen, 2009; Berrone and Gomez- Mejia, 2009; Brammer et al., 2012; Walker an Wan, 2012; Islam, 2017).

For this reason, in the following sections of the study, the concept of greenwashing will be discussed with an institutional approach.

2 An Institutional Approach to the Concept of Greenwashing: Institutional Theory

Due to such kind of reasons, organizations’ selective discourses have become an issue, which gains more and more importance. It can be argued that concepts like transparency and accountability, which make more impact day by day, prompt organizations to prove their legitimacy (Bromley and Powell, 2012). Institutional (corporate) expectations and d4emands of important stakeholders put pressure on organizations (Okan et al., 2016). In recent years, stakeholders have become more capable of reaching information regarding financial performances and also closely follow statements of organizations regarding social and environmental issues (Jira and Toffel, 2013). Organizations are under the pressure of a number of stakeholders such as investors, clients, governments, and NGOs to share more information regarding their environmental impacts (Marquis et al., 2016).

In line with these developments, it draws the attention that most of the contemporary organizations publish environmental reports. While the numbers of these reports are higher in developed countries, they have been gradually increasing in developing countries (Marguis et al., 2016). The increase in the numbers of reports points out to an important social problem. The reasons for the increased informative statements on the environment are among the most important matters of discussion. In these directions, some of the questions that are sought to be answered are as follows:

To what extent the environmental reputation efforts and statements on being environmentalist, which are developed as a result of transparency and accountability pressures, are compatible with organizational practices?

Do discourses and reports of organizations regarding the environment consist of complete and accurate information?

Do organizations make selective or deceptive statements regarding the environment in order to manage the expectations of stakeholders?

In light of given explanations, it can be argued that the concept of greenwashing is based on the deceptive impressions and statements of organizations that stem from transparency and accountability pressures.

The legitimacy that is gained through greenwashing provides important benefits for organizations. Gaining legitimacy – which means to obtain supremacy on competitiveness and power through easier and enhanced access to resources, stronger and long-terms relations through business partnerships, and employing more qualified labor force – is possible by means of greenwashing practices (DiMaggio and Powell, 1983; Pfeffer and Salancik, 1978; Turban and Greening, 1997). When it is considered that increasing legitimacy means increasing financial performance for an organization (Deephouse, 1999), the greenwashing practices also serve to the profitability of an organization by ensuring its legitimacy. Organizations that aim to protect and increase their financial performance focus on using environmental and social messages to establish and maintain their legitimacy (Sethi, 2002; Perrini et al., 2010). Inevitably, this increasing focus leads to the emergence of greenwashing practices. All of these clarifications demonstrate that organizations that aim to survive and become stronger should put efforts in gaining legitimacy (Palazzo and Scherer, 2006).

The empirical studies conducted on greenwashing revealed that organizations display statistically significant relations between their environmental practices and organizational behaviors (Bansal and Roth, 2000; Al-Tuwairjri et al., 2004; Mitchell and Ramey, 2011). There are various reasons for an organization to be environmentally conscious or perform green activities that are mentioned in the literature. These reasons include gaining competitive advantage in the sector, creating the perception of legitimacy and social responsibility, and reducing operational costs (Bansal and Roth, 2000). Accordingly, an organization that will gain legitimacy by being perceived as honest and socially responsible will also gain an important competitive advantage.