Greenwashing vs. impact branding

Reading time: ~23 min

What does the EU Green Claims Directive mean for your business?

Simply put: if you can't substantiate your sustainability claims with evidence, you're no longer allowed to make them. The European directive that changes the rules for every business calling itself 'sustainable' or 'green' was transposed into national law by 27 March 2026 and becomes applicable across the EU on 27 September 2026. The line between greenwashing and authentic impact branding has never been sharper - with real consequences for your brand, your people, and your future.

Why does nobody believe in green promises anymore?

We live in an era where almost every company calls itself 'sustainable'. From fast fashion chains flaunting green labels to energy companies planting trees while pumping fossil fuels. Consumers have lost trust - and honestly: who can blame them?

Research by the European Commission shows that more than half of all environmental claims in the EU are vague or misleading. Forty percent are not backed by any evidence whatsoever. That is not a communication problem. That is a credibility problem. And you won't fix it with a prettier website.

Greenwashing and the EU Green Claims Directive are changing the rules of the game. But there is an alternative: impact branding that starts from who you truly are - not from who you want to appear to be.

What is greenwashing and how do you recognise it?

Greenwashing is the practice of presenting an organisation as greener, more sustainable, or more socially responsible than it actually is. This can range from subtle to shameless:

• Vague claims such as 'eco-friendly', 'green' or 'natural' without any substantiation
• Selective transparency: highlighting one sustainable initiative while the core activity remains harmful; a pattern that Marquis, Toffel & Zhou (2016) document at global scale as 'selective disclosure'
• Misleading labels and certifications that have not been verified by independent parties
• Future promises without a plan: 'We will be carbon neutral by 2050' with no concrete roadmap or investment

The problem? Consumers, employees, and stakeholders are seeing through it more and more. And now, so is the legislator. With fines that hurt more than a bad Trustpilot review.

What does the EU Green Claims Directive say exactly?

Europe is drawing a hard line. In recent years, the EU has developed two important directives targeting greenwashing:

1. Directive Empowering Consumers for the Green Transition (2024/825)

This directive had to be transposed into national law by 27 March 2026 and becomes applicable from 27 September 2026. It explicitly prohibits:

• Generic environmental claims such as 'eco-friendly' or 'carbon neutral' without evidence
• The display of unreliable voluntary sustainability certifications
• Claims about future environmental performance without a detailed, realistic, and independently verified implementation plan

2. The Green Claims Directive

This proposed directive goes even further, requiring scientific substantiation of environmental claims, harmonised labelling, and prior verification by independent third parties.

The consequences are real. In the Netherlands, fines can reach €900,000 or ten percent of annual turnover. In Italy, the competition authority already imposed a €1 million fine on fast fashion giant Shein in 2025 for misleading claims about their supposedly 'circular' collection — vague assertions about recyclability that simply were not true.

The message is clear: if you cannot prove it, you can no longer claim it. And 'we're working on it' doesn't count as proof.

Importantly: this doesn't only affect multinationals. SMEs that claim on their website to 'produce sustainably' or 'operate carbon neutrally' also fall under this legislation. The likelihood of an SME being fined first is small, but the chance of a competitor or consumer organisation calling you out on it grows by the day. What this concretely means for your brand portfolio - which claims the parent carries, which sub-brands may 'borrow' - is what we work out in One brand, unless… the little green booklet on brand portfolio 2026.

Concrete examples: when green is not green

Greenwashing takes many forms. Here are a few telling cases:

• KLM was found guilty of greenwashing by the Amsterdam District Court in March 2024. 15 of the 19 claims in the 'Fly Responsibly' campaign were found to be misleading and unlawful, including promises about CO2 compensation and sustainable aviation fuel. The court ruled that KLM painted an overly rosy picture of flying as a sustainable activity.
• Energy companies that position themselves as 'green on the go' or 'sustainable energy providers' while the vast majority of their portfolio consists of fossil fuels. In the Netherlands, this will soon carry a fine of up to €900,000.
• Shell lost a case in 2022 at the Advertising Code Appeals Board over misleading CO2 compensation: the promise that customers could offset their emissions by paying 1 cent extra per litre was found to be legally untenable. The Advertising Code Committee had already ruled against Shell earlier. A textbook example of future promises without proper substantiation.
• Fast fashion brands launching 'organic cotton' collections while 99% of their production continues under the same harmful conditions. The very definition of selective transparency.

What all these examples have in common? The external story does not match what is happening internally. And that's exactly the kind of inconsistency that both consumers and judges have become allergic to.

But there is also a category that is less visible and perhaps more relevant for most readers of this article: unintentional greenwashing. Organisations that are genuinely trying to become more sustainable, but in their enthusiasm make claims they cannot (yet) substantiate. The SME that writes 'we produce carbon neutrally' on its website while no CO2 measurement has been conducted. The scale-up that claims 'circularity' while 80% of production remains linear. No ill intent, but a legal risk nonetheless. And precisely there lies the difference with authentic impact branding.

What is authentic impact branding?

At BR-ND People, we believe that brands and culture can be a force for good. But that does not start with a campaign or a slogan. It starts with a fundamental question: why do we exist, and for whom do we make a difference?

Authentic impact branding differs from greenwashing on three crucial points:

1. It lives in the core processes, not just in communications

A brand with a clear purpose integrates impact into the heart of its operations. Not as an afterthought, but as a starting point. That means sustainability and social value are reflected in production, procurement, HR policy, governance, and innovation. It is not about crafting a nice story for the outside world — it is about an intrinsic conviction that shapes every decision. How to translate that conviction into concrete, daily behavior is explored in our article on translating core values into concrete workplace behavior.

2. It is scientifically grounded and measurable

Where greenwashers make vague promises, impact brands work with concrete goals, measurable indicators, and independent verification. Think of B Corp certification, where your company's performance on governance, employees, community, environment, and customers is assessed by an independent party. Or consider VSME and B Corp's BIA - two measurement instruments we compare in a separate article.

3. It is carried from within

The most powerful difference? In true impact branding, the story is not invented by the marketing department. It is born from the beliefs and experiences of the people who make up the organisation. From the shop floor to the boardroom.

What does greenwashing mean for your people and employer brand?

This is perhaps the most underestimated aspect of the greenwashing debate. Your brand isn't just what you communicate externally. It's what your people experience every day.

For existing employees: if the external story does not match the internal reality, cynicism sets in. Employees who notice that 'purpose' is merely a marketing vehicle become disillusioned. This leads to lower engagement, higher turnover, and a culture where nobody believes in the shared goal anymore.

Conversely: when employees experience that their organisation is genuinely contributing to something that matters, engagement, ownership, and pride grow. They become ambassadors — not because they have to, but because they feel it.

For future employees, the impact is even greater. The new generation of workers consciously chooses organisations that share their values. They are digital natives, see through marketing talk in an instant, and openly share their experiences on platforms like Glassdoor and LinkedIn. An organisation that greenwashes loses not only credibility with customers, but also the talent it needs most.

An authentic purpose story isn't just a brand strategy. It is a recruitment strategy; our article on how employer branding cuts recruitment costs by up to 50% shows just how powerful that connection is. It is a retention strategy and a culture strategy. And if you want that shift to land internally, it's worth looking at change communication as well.

How do you develop authentic impact branding? (Hint: not with a campaign)

You can't impose a purpose. (Trust us, we've tried delegating it to PowerPoint. Doesn't work.) You can only discover it together. That is why co-creation is the foundation of every successful impact branding process.

This conviction is not ours alone. Research on organisational change consistently shows that change initiatives developed bottom-up have a significantly higher success rate than top-down imposed trajectories (Kamarova, Gagné, Holtrop & Dunlop, 2024). The self-determination theory of Deci and Ryan (1985) explains why: when people experience autonomy, competence, and relatedness, intrinsic motivation emerges. A purpose that is discovered together feels like one's own; a purpose that is imposed feels like an assignment. The difference between those two determines whether the story lives or dies.

At BR-ND People, we work from an inside-out approach. That means: we don't start with what the market wants to hear, but with what the organisation truly is and can be. Not a playbook from a management textbook, but a process that adapts to the organisation. The common thread works as follows:

Step 1: Listen and gather (not broadcast)

We begin with in-depth interviews, round-table conversations, and surveys among employees at all levels — from the executive board to the front line. Everyone has a voice, because the story of the organisation is a story by employees for employees.

Step 2: Analyse and interpret

Social scientists and brand strategists analyse the gathered insights. What are the shared convictions? Where is the energy? What is the common thread that connects the organisation? This is where science and creativity meet.

Step 3: Co-create and anchor

Building on these insights, we develop the brand story, purpose, and strategic direction together with a sounding board of employees. This is not a top-down exercise. It is a shared process in which ownership emerges because people recognise themselves in the outcome.

Step 4: Activate and embed (or: from paper to the hallway)

A great story on paper is worth nothing if it doesn't live in practice. A brand story that ends up in a drawer is the most expensive document your organisation has ever produced. Activation means: translating the story into behaviour, rituals, leadership development, and concrete actions in the daily running of the business. From onboarding to client contact, from procurement policy to innovation.

Impact branding in practice: who's getting it right?

At BR-ND People, we've had the privilege of working with organisations that genuinely want to create impact. Not showroom cases, but honest stories about what worked, what was hard, and what we learned:

• Dierenbescherming (Dutch Society for the Protection of Animals): together we discovered a brand story, purpose, and brand strategy for an organisation that puts animal welfare at its core. The result: a story that resonated not only externally, but internally led to a noticeably stronger sense of shared direction. Was it straightforward? No; precisely in an organisation with so many passionate professionals, it proved challenging to formulate one shared story that did justice to all perspectives.
• Bernhoven: at this hospital, we worked on internal engagement and leadership development through storytelling. The trajectory showed that impact branding is not only for 'green' organisations; a hospital that connects its people around a shared purpose builds a culture that patients directly feel. The challenge here was bridging the gap between boardroom language and the daily reality on the ward; that required more listening than talking.
• Volksbond Streetcornerwork (PerMens): during a merger, we developed a brand story, purpose, and brand strategy with a focus on internal collaboration and engagement. The specific challenge: bringing two organisational cultures together without either feeling swallowed up. The new brand PerMens was born from co-creation with the employees themselves; precisely because of this, both 'camps' felt heard.
• Municipality of Tilburg: we guided the development of the 'Story of the Organisation' - a process in which we articulated the identity, values, and mission of the organisation together with all employees through interviews, round-table conversations, and surveys. A textbook example of co-creation in practice.

What all these trajectories have in common? The story was not invented for the organisation. It was discovered with the organisation.

Is your brand guilty of greenwashing? Take the checklist.

Be honest with yourself. Answer these questions:

• Is our purpose anchored in our core business processes, or only in our communications?
• Can we substantiate every sustainability claim with concrete data and independent verification?
• Do our employees recognise themselves in the story we present to the outside world?
• Have we involved our employees in developing our brand story?
• Do we dare to be transparent about where we still fall short?
• Do our claims comply with the new EU directives?

How to interpret:

• A 'no' on question 6 (EU compliance) is in itself a legal risk that requires immediate action
• A 'no' on question 2 (substantiation) combined with active sustainability claims on your website means you are already vulnerable
• Three or more times 'no' points to a structural problem: the gap between your external story and your internal reality is too wide to fix with cosmetic adjustments

Don't be discouraged if the score disappoints. Honesty about your starting position is the beginning of every good strategy. And that is precisely what distinguishes authentic impact branding from greenwashing: it begins with the truth, not the wish.

Frequently asked questions about greenwashing and the EU Green Claims Directive (and honest answers)

The questions we hear most from executives, marketers, and sustainability managers. No jargon, just nuance.

What is the EU Green Claims Directive?

The EU Green Claims Directive is a European directive that requires companies to scientifically substantiate environmental claims, use harmonised labelling, and have claims verified in advance by independent third parties. Its goal is to structurally tackle misleading sustainability claims — known as greenwashing.

What are the penalties for greenwashing in the Netherlands?

Enough to lose sleep over. Under the Directive Empowering Consumers for the Green Transition (2024/825), companies in the Netherlands can face fines of up to €900,000 or ten percent of annual turnover for misleading environmental claims.

What is the difference between greenwashing and impact branding?

Greenwashing is when an organisation presents itself as more sustainable than it actually is — the story doesn’t match reality. Authentic impact branding starts from what the organisation truly does and believes: purpose is embedded in core business processes, not just in communications.

Does the EU Green Claims Directive apply to companies outside the EU?

Yes. The directive applies to all companies offering products or services on the EU market and making environmental claims — regardless of where they are based. Companies selling into the EU need to comply with the Directive Empowering Consumers for the Green Transition (2024/825) by 27 September 2026; the transposition deadline for member states was 27 March 2026.

How do you start with authentic impact branding?

Not with a campaign. Start from the inside out: map what your organisation truly does, believes, and strives for. Impact branding does not begin in the communications department — it begins with the convictions of the people who make up the organisation. Co-creation with employees is essential: it produces a story that is both credible and genuinely carried.

What is the difference between greenwashing and greenwishing?

Greenwashing is the deliberate or unintentional misleading of stakeholders about your sustainability performance. Greenwishing is subtler: it involves genuine sustainability ambitions that are not met, not out of malice but out of overconfidence or lack of resources. The SME that writes 'carbon neutral' on its website while no CO2 measurement has been conducted is greenwishing. The difference is intent, but legally it doesn't matter: under the EU Green Claims Directive, both are prohibited if not substantiated with evidence.

How do you recognize greenwashing in your own suppliers?

Watch for three signals. First: vague claims without data. If a supplier says 'we are sustainable' but cannot name specific metrics, that's a red flag. Second: selective transparency. Highlighting one bio initiative while core production remains harmful. Third: the absence of independent verification. Certifications like B Corp, ISO 14001 or EcoVadis provide a minimum guarantee; their absence isn't necessarily a problem, but dodging the question is.

What does the EU Green Claims Directive mean specifically for SMEs?

The directive applies to all companies making environmental claims in the EU market, regardless of size. The likelihood of an SME being fined first is realistically low, but the chance of a competitor, consumer organization or journalist calling you out on it grows rapidly. Moreover, large clients are becoming increasingly strict in their supply chain requirements; if you supply to a CSRD-obligated company, their requirements become yours.

Can B Corp certification prevent greenwashing?

Partially. B Corp certification provides an independently verified framework that goes considerably further than most voluntary standards. But it is not a guarantee against greenwashing, as the Nespresso and BrewDog cases demonstrate. The new B Corp standards (2026) address this with mandatory requirements across all seven impact areas and external verification by third parties. More on this in our article how to become a B Corp certified company.

How do you communicate about sustainability without being preachy?

By framing it as opportunity, not obligation. Research on climate communication (Flusberg et al., 2024) shows that value-based communication is more effective than guilt-based. Talk about what you are doing and why, not about what others are doing wrong. Be honest about what you don't yet know or can't yet achieve. And avoid moralizing: nobody has ever become enthusiastic about a wagging finger.

What is the difference between impact branding and purpose washing?

Purpose washing is the variant of greenwashing that focuses on social goals: an organization claiming to be 'purpose-driven' while the purpose is merely a marketing campaign, not anchored in policy, governance, or daily behavior. The difference with authentic impact branding lies in depth: is the purpose visible in your supply chain, your HR policy, and your financial choices? Or only in your annual report and your LinkedIn posts?

Honest is honest: the limits of impact branding

An intellectually honest argument about greenwashing must also ask the uncomfortable questions about impact branding itself.

The paradox of authenticity. The more authentic impact branding becomes, the more attractive it becomes as a marketing instrument. The line between 'genuinely purpose-driven' and 'cleverly communicated purpose-driven' is getting thinner. Consumers already skeptical from years of greenwashing struggle to see the difference. And honestly: sometimes there isn't one.

The measurability challenge. Certifications like B Corp offer an independent assessment framework, but they're not perfect. As we describe in our article on how to become a B Corp certified company, even the strictest standards have blind spots. The Nespresso and BrewDog cases prove it. There's also a growing risk of 'certification fatigue': so many labels that no label differentiates anymore.

The cost question. Authentic impact branding costs money, time, and organizational courage. Not every organization can afford that, especially SMEs. The honest question is: what do you do if you genuinely want to become more sustainable, but lack the resources to prove it at B Corp level? The answer isn't 'then don't bother.' The answer is: start where you are, be honest about where you stand, and let your story grow with your actual impact. That's the difference between greenwishing and greenwashing; intent isn't proof, but it's not a crime either.

These nuances don't weaken the case for impact branding. They sharpen it. The organizations that perform best aren't the ones with the slickest sustainability campaign. They're the ones willing to face the gap between story and reality; and to close it, step by step, in full view.

From green coat to green heart

The world doesn't need more green promises. It's had quite enough of those, actually. What it does need? Organisations that have the courage to be honest about where they stand, and the ambition to do better. Not as a marketing strategy, but as a reason to exist.

The shift from greenwashing to authentic impact branding is not just a legal necessity driven by new EU legislation. It is a strategic opportunity. Organizations that consciously scale their culture alongside growth build the strongest impact brands; more on that in our article on how to preserve culture during rapid scaling. Organisations that take their purpose seriously attract better people, build stronger relationships, and create lasting value.

The difference between a green coat and a green heart? You don't make that with a slogan or a certificate. You make it with your people, your processes, and your daily choices. Every single day.

Client stories

Organisations building authentic impact from the inside out:

• Amsterdam Impact: uniting creative force for positive impact
• Circle Economy: a brand story that fits a circular leader again
• ANWB Reizen: finding one heart in a family of travel brands

Scientific sources

Grounding for this article; peer-reviewed academic research (UCLA, Columbia, Cornell, Harvard Business School, MIT Sloan, University of Michigan, Boston University, University of Rochester, University of Melbourne, Curtin University) and primary legal sources (European Commission, EU legislator, District Court of Amsterdam, AGCM Italy, Dutch Advertising Code Committee).

• Deci, E.L. & Ryan, R.M. (1985). Intrinsic Motivation and Self-Determination in Human Behavior. Plenum. University of Rochester.
• Delmas, M.A. & Burbano, V.C. (2011). The Drivers of Greenwashing. California Management Review, 54(1), 64-87. UCLA / Columbia Business School.
• Du, S., Bhattacharya, C.B. & Sen, S. (2010). Maximizing Business Returns to Corporate Social Responsibility. International Journal of Management Reviews, 12(1), 8-19. Boston University / Cornell.
• Flusberg, S.J., Holmes, K.J., Thibodeau, P.H., Nabi, R.L. & Matlock, T. (2024). The Psychology of Framing. Psychological Science in the Public Interest, 25(3), 105-161.
• Kamarova, S., Gagné, M., Holtrop, D. & Dunlop, P.D. (2024). Identifying the conditions under which employees thrive during organizational change. Journal of Organizational Behavior. Curtin University.
• Lyon, T.P. & Montgomery, A.W. (2015). The Means and End of Greenwash. Organization & Environment, 28(2), 223-249. University of Michigan / Boston University.
• Marquis, C., Toffel, M.W. & Zhou, Y. (2016). Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing. Organization Science, 27(2), 483-504. Cornell / Harvard Business School.
• Nyilasy, G., Gangadharbatla, H. & Paladino, A. (2014). Perceived Greenwashing: The Interactive Effects of Green Advertising and Corporate Environmental Performance. Journal of Business Ethics, 125(4), 693-707. University of Melbourne / University of Oregon.
• Schein, E.H. (2010). Organizational Culture and Leadership (4th ed.). Jossey-Bass. MIT Sloan.

Primary legal sources

• European Union (2024). Directive (EU) 2024/825 Empowering Consumers for the Green Transition. Official Journal of the European Union.
• European Commission (2021). Screening of websites for 'greenwashing': half of green claims lack evidence.
• European Commission (2023). Proposal for a Directive on Green Claims. COM(2023) 166 final.
• AGCM Italy (2025). Decision on misleading environmental claims by Shein. Autorità Garante della Concorrenza e del Mercato.
• District Court of Amsterdam (2024). Ruling in Fossielvrij NL vs. KLM. ECLI:NL:RBAMS:2024:1512.
• Dutch Advertising Code Committee / Appeals Board (2022). Ruling on Shell CO2 compensation claims.

Written by: Alexander Koene & Kim Cramer PhD