The (in)ability of consumers to perceive greenwashing and its influence on purchase intent and willingness to pay

Background: Environmental concerns have led to consumers increasingly being willing to pay a premium for environmentally friendlier products. Unfortunately, this has led to the practice ‘greenwashing’, which yields handsome financial rewards. Consumers are not sufficiently aware of greenwashing, and little is known about the effects of such knowledge.Aim: This article explores how consumers who become aware of greenwashing, respond in terms of purchase intent and willingness to pay.Setting: The population was South African middle- to upper-income consumers. The findings were based on 120 responses.Methods: The study used a 2 × 2 experimental design in which greenwashing knowledge and greenwashing presence were manipulated.Results: We found that consumers reward greenwashing when it is undetected. Educating consumers about environmental issues does not develop their ability to identify greenwashing. In contrast, consumers who are educated about greenwashing and become aware of it, penalise such products through what we term a ‘greenwash penalty’. We define the greenwash penalty as the shift in consumers’ willingness to pay a premium for a product when they become aware of greenwashing. Purchase intent (PI) is also impacted by greenwashing.Conclusion: Companies often try to drive awareness of environmental problems. Our research shows that such initiatives reward all companies that make claims, even when such claims are false. Companies that sell truly green products must educate consumers about the potential harm of misleading information. Once consumers are able to spot greenwashing attempts, companies that sell real green products should then provide true and transparent information about their own products.