Greenwashing is communication that leads people to believe a company's environmental practices or products are better than they are. For industrial and manufacturing companies, it is a commercial risk as well as a legal one. Business buyers find it hard to judge suppliers' sustainability, so they look for credible signals, and research shows that genuine environmental practice can strengthen a B2B brand and its market performance. In Canada, the Competition Act requires environmental claims about products to be based on adequate and proper testing, and claims about a business or its activities to be backed by adequate and proper substantiation. The safest sustainability claim is specific, scoped and supported by evidence you could show a customer tomorrow.
What is greenwashing?
Lyon and Montgomery (2015) reviewed the research on greenwash and described it as communication that misleads people into overly positive beliefs about an organization's environmental practices or products. They found the term covers many specific forms of misleading environmental communication.
A systematic review by de Freitas Netto and colleagues (2020) sorted those forms into four classes. Here is how each might look in an industrial company. The examples are illustrations, not cases from the studies.
- Firm-level claim. "We are a sustainable manufacturer," with nothing behind it but a recycling program in the office.
- Firm-level executional. Green leaves, wind turbines and forest imagery across a website for a company whose operations have not changed.
- Product-level claim. "Eco-friendly coating" with no test data, or "low-emission" with no stated baseline.
- Product-level executional. A product brochure printed in green with nature photography that implies an environmental benefit the product does not have.
Why companies greenwash
Delmas and Burbano (2011) examined the drivers and found them at three levels: external pressures from institutions and markets, organizational factors, and individual factors. They also noted that limited and uncertain regulation made greenwashing harder to control.
Here is one way the organizational drivers can play out in an industrial firm. Sales wants a sustainability line for a tender. Marketing writes it without checking with operations. Nobody owns the evidence. Over time, the claim appears in proposals, on the website and in trade show graphics, and it drifts further from what the plant can prove.
Why sustainability claims matter more in B2B
Buyers are trying to tell real performance from talk
Kapitan, Kennedy and Berth (2019) note that B2B buyers find it increasingly difficult to judge the true sustainability of supply chain partners. They interviewed buyers and marketing managers and then ran scale development studies with 578 experienced industrial buyers. A sustainably superior position in the eyes of B2B buyers rested on five factors:
- Sustainability credibility
- Concern for environmental impact
- Careful consideration of stakeholders
- Resource efficiency
- A holistic philosophy
Credibility comes first on that list. Buyers are looking for evidence that the claims are true.
Genuine practice pays off
Vesal, Siahtiri and O'Cass (2021) collected data from B2B manufacturers and their customers. Environmental sustainability practices improved manufacturers' brand image, which in turn improved market performance. The effect was stronger when firms managed customer relationships well and when their customers had positive environmental attitudes. We explain how brand image connects to buyer response in our guide to B2B brand equity.
Misleading claims change how stakeholders see you
In an experiment, Torelli, Balluchi and Lazzini (2020) found that different levels of greenwashing had significantly different effects on how stakeholders perceived a company's environmental responsibility and how they reacted to an environmental scandal. A bibliometric review of 310 documents on greenwashing and stakeholders listed B2B relationships among the areas where its effects are being studied (Santos, Coelho & Marques, 2024).
Trust is what is at stake. In my meta-analysis of 71 brand equity studies, trust had one of the strongest associations with customer-based brand equity (ρ = 0.69 across 10 samples; ρ is a correlation on a scale from −1 to 1), and stronger brand equity went with lower perceived risk (Farrokhi, 2020). A sustainability claim that a customer later finds to be untrue puts that trust at risk.
Your customers' climate risk is your opportunity
Khan, Gupta, Kumar and Kumar (2023) argue that climate change risk is especially pertinent to B2B firms, because so much of it is driven by industrial practices across the value chain and manufacturing process. They propose a framework linking climate risk to brand strategy, customer engagement and stakeholder value. For a supplier, that means your customers may need your data to make their own claims, and getting it wrong spreads the problem down the chain.
Practices can fade inside relationships
Sallnäs and Huge-Brodin (2018) studied logistics providers and their shipper customers. Environmental practices could flourish or fade depending on tensions in the relationship, for example when a provider's environmental ambition ran into a shipper's financial goals. Environmental competence cultivated by the provider could strengthen its position. A claim that was true at the start of a contract can stop being true if the practice behind it quietly lapses.
What Canadian law requires
This section summarizes public guidance as of October 2026. It is not legal advice. Check specific claims with counsel.
- The general rule. The Competition Act prohibits false or misleading representations to promote a product or business interest, and the Competition Bureau considers the general impression a claim creates, as well as its literal meaning (Competition Bureau Canada, 2026).
- Product claims. Claims about the environmental benefits of a product or service must be based on adequate and proper testing. Amendments in June 2024 added specific provisions for these claims, and the 2026 changes did not remove this requirement (MLT Aikins, 2026).
- Business and activity claims. Claims about a business or its activities, such as "carbon neutral by 2030" or "our operations are sustainable," must be backed by adequate and proper substantiation. Bill C-15, which received Royal Assent on March 26, 2026, removed the earlier requirement that this substantiation follow an internationally recognized methodology (Competition Bureau Canada, 2026; MLT Aikins, 2026).
- Private complaints. Bill C-15 also removed private parties' ability to seek leave from the Competition Tribunal over another party's environmental claims about its business or activities. Private applications about product claims remain possible, and the Bureau can still investigate business and activity claims (MLT Aikins, 2026).
- Guidance is changing. The Bureau has said it will update its guidance on environmental claims to reflect the 2026 change (Competition Bureau Canada, 2026).
Selling into Europe
EU member states must apply Directive (EU) 2024/825 from 27 September 2026. It mainly covers claims made to consumers, but it can matter to B2B suppliers whose claims are passed on to consumers by their customers. It sets a high bar for generic terms such as "green" or "eco-friendly," restricts sustainability labels that are not based on certification schemes or public authorities, and prohibits claims that a product has a neutral, reduced or positive greenhouse gas impact based on offsetting (Bird & Bird, 2024).
Sustainability claims to check today
Look through your website, brochures, proposals, packaging and booth graphics for these patterns.
- Vague words: "green," "eco-friendly," "sustainable," "environmentally responsible," with nothing specific attached.
- Neutrality claims based on offsets: "carbon neutral product" when the neutrality comes from purchased credits.
- Numbers without a baseline: "30% less energy" without saying compared with what, measured how and under what conditions.
- Whole-company claims from one initiative: one solar array presented as a sustainable operation.
- Future targets with no plan: "net zero by 2040" with no interim steps, budget or reporting.
- Certifications that don't apply: a logo for a certification that covers one plant or one product line, shown as if it covers everything.
- Imagery that implies more than you can prove: forests, oceans and wind turbines around products with no related benefit.
How to make sustainability claims industrial buyers trust
- Start with what you can measure. Energy per unit, scrap rate, water use, recycled content, product life, refurbishment rates. Industrial buyers respect specifics.
- Scope every claim. Say which product, which plant, which year and compared with what.
- Keep the evidence file. For every claim in use, record the test, data source, method and owner. If you can't produce it within a day, rewrite or remove the claim.
- Separate product claims from company claims. Canadian law treats them differently, so your evidence file should too.
- Use third-party verification where it fits. Independent testing and recognized certifications add credibility, as long as you show exactly what they cover.
- Connect claims to the buyer's own goals. Show how your product helps the customer measure and reduce their own impact. That is often more useful to them than a statement about you. Our guide to customer value propositions shows how to frame benefits in the buyer's terms.
- Brief sales and marketing. Give them approved wording and a list of claims not to make. Proposals are written fast and reused, so one unchecked claim can spread to dozens of documents.
- Review yearly. Practices change and so does the law. Check that every live claim is still true and still supported.
Documented results are the best sustainability content you can publish. A case study that shows a customer's measured energy savings does more than a page of environmental values.
Frequently asked questions
What is greenwashing in simple terms?
Making a company or product sound better for the environment than it really is, through words, numbers or images.
What are examples of greenwashing in B2B?
Common patterns include calling a product "eco-friendly" without test data, claiming carbon neutrality based only on offsets, citing energy savings with no baseline, and showing a certification that covers only part of the business.
Is greenwashing illegal in Canada?
False or misleading representations are prohibited under the Competition Act. Environmental claims about products must be based on adequate and proper testing, and claims about a business or its activities must be backed by adequate and proper substantiation. As of March 2026, that substantiation no longer has to follow an internationally recognized methodology. Get legal advice on specific claims.
Why do companies greenwash?
Research points to external pressure from markets and institutions, organizational factors and individual factors, made worse by limited or uncertain regulation (Delmas & Burbano, 2011).
How can a manufacturer avoid greenwashing?
Make claims specific and scoped, keep evidence for each one, separate product claims from company claims, use third-party verification where it applies, and brief everyone who writes proposals and marketing copy.
The bottom line
Collect every sustainability claim your company makes today, from the website to the last three proposals, and list the evidence behind each. Remove or rewrite anything you couldn't show a customer's auditor. AXXEN's Brand Systems work helps industrial companies build positioning and proof that stand up to scrutiny. For how brand and trust work together, see our guide to B2B branding for industrial companies and the B2B marketing strategy playbook.
About the author
Mo Farrokhi, PhD, is the founder of AXXEN in Calgary, Alberta. His path runs from electrical engineering through an MBA and a PhD in marketing to industry roles, including VP Marketing & Product at a TSX-listed clean-tech company. AXXEN builds marketing systems for technology, manufacturing and industrial companies that have outgrown ad-hoc marketing.
Sources
- Bird & Bird. (2024). Directive to empower consumers for the green transition has been adopted. twobirds.com
- Competition Bureau Canada. (2026). Environmental claims and greenwashing (page modified October 23, 2026). competition-bureau.canada.ca
- de Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B., & Soares, G. R. d. L. (2020). Concepts and forms of greenwashing: a systematic review. Environmental Sciences Europe, 32(1). https://doi.org/10.1186/s12302-020-0300-3
- Delmas, M. A., & Burbano, V. C. (2011). The Drivers of Greenwashing. California Management Review, 54(1), 64–87. https://doi.org/10.1525/cmr.2011.54.1.64
- Farrokhi, M. (2020). Working together toward a better brand: Customer-based brand equity and co-creation of value with consumers (Doctoral thesis, University of Calgary, Calgary, Canada). https://hdl.handle.net/1880/111769
- Kapitan, S., Kennedy, A. M., & Berth, N. (2019). Sustainably superior versus greenwasher: A scale measure of B2B sustainability positioning. Industrial Marketing Management, 76, 84–97. https://doi.org/10.1016/j.indmarman.2018.08.003
- Khan, H., Gupta, S., Kumar, V., & Kumar, B. (2023). Managing climate change risks and creating stakeholders' value via sustainability-focused B2B brand strategies. Industrial Marketing Management, 115, 198–213. https://doi.org/10.1016/j.indmarman.2023.09.017
- Lyon, T. P., & Montgomery, A. W. (2015). The Means and End of Greenwash. Organization & Environment, 28(2), 223–249. https://doi.org/10.1177/1086026615575332
- MLT Aikins. (2026). Federal government narrows scope of the Competition Act's anti-greenwashing provisions as Bill C-15 receives royal assent. mltaikins.com
- Sallnäs, U., & Huge-Brodin, M. (2018). De-greening of logistics? – Why environmental practices flourish and fade in provider-shipper relationships and networks. Industrial Marketing Management, 74, 276–287. https://doi.org/10.1016/j.indmarman.2018.07.001
- Santos, C., Coelho, A., & Marques, A. (2024). A systematic literature review on greenwashing and its relationship to stakeholders: state of art and future research agenda. Management Review Quarterly, 74(3), 1397–1421. https://doi.org/10.1007/s11301-023-00337-5
- Torelli, R., Balluchi, F., & Lazzini, A. (2020). Greenwashing and environmental communication: Effects on stakeholders' perceptions. Business Strategy and the Environment, 29(2), 407–421. https://doi.org/10.1002/bse.2373
- Vesal, M., Siahtiri, V., & O'Cass, A. (2021). Strengthening B2B brands by signalling environmental sustainability and managing customer relationships. Industrial Marketing Management, 92, 321–331. https://doi.org/10.1016/j.indmarman.2020.02.024
