What Is Greenwashing: A Guide for Malaysian Businesses

Sustainability is now front and centre in Malaysian business and consumer awareness. From product packaging to ESG reporting and marketing campaigns, “green” language is everywhere.

But not all green messaging reflects real environmental action. Some companies make claims that sound responsible but lack substantive proof. This phenomenon is called greenwashing, and it carries real business, reputational, and regulatory implications.

This guide explains what greenwashing is, why it matters for Malaysian businesses, the legal and market context around it, and how to communicate sustainability credibly.

What Is Greenwashing?

Greenwashing means making environmental claims that are vague, exaggerated, misleading, or not backed by credible evidence.

Common traits include:

• Claims that prioritise image over measurable impact.
• Buzzwords like “eco-friendly” or “green” without clear definitions.
• Highlighting minor positives while ignoring major negatives.
• Use of nature imagery to imply sustainability without solid proof.

In short, greenwashing misleads audiences about a company’s actual environmental performance instead of providing transparent, verifiable information.

(Source: Investopedia; Business News Daily; NRDC)

Why Greenwashing Matters in Malaysia

Greenwashing isn’t just a PR issue. It affects trust, compliance, and business value.

Consumer Confusion

• Misleading green claims make it harder for buyers to distinguish genuinely sustainable products from superficial messaging. 
• Social media analysis shows Malaysian consumers are actively discussing greenwashing and questioning environmental claims online.

(Source: Isentia Malaysia)

Trust and Loyalty Risks

• Research globally shows that when greenwashing is exposed, it erodes consumer trust, brand loyalty, and willingness to pay. 
• Once trust is lost, rebuilding it is slow and expensive.

(Source: Systematic literature on greenwashing and trust)

Competitive Pressure

As sustainability becomes a baseline expectation, companies that rely on vague or unsubstantiated claims lose ground to brands that provide evidence and clear reporting.

(Source: Academic research on green consumption behaviour)

Regulations and Guidelines Relevant to Greenwashing in Malaysia

There is no specific “anti-greenwashing law” in Malaysia, but several existing frameworks govern misleading environmental and commercial claims.

Consumer Protection Act 1999 (CPA)

• Prohibits false, deceptive, or misleading representations in marketing and advertising, including environmental claims.
• Misleading green statements can be actionable if they misrepresent product characteristics or benefits.

(Source: Consumer Protection Act 1999)

Malaysian Code of Advertising Practice (MCAP)

• Requires all claims, including environmental ones, to be honest and substantiated with evidence.
• Advertisers must hold supporting data and avoid vague, absolute terms like “environmentally friendly” without context.

(Source: MCAP Part 11: Environmental Claims)

ESG and Capital Markets Guidance

For financial institutions and listed firms, several frameworks aim to reduce greenwashing risk and improve consistency in sustainability disclosures, including:

• Sustainable and Responsible Investment (SRI) Taxonomy – Standardises how “sustainable” activities are defined in the Malaysian capital market.
• Climate Change and Principle-based Taxonomy (CCPT) – Guides financial institutions in classifying financing exposures by climate and environmental impact.
• Bursa Malaysia Sustainability Reporting Requirements – Require listed issuers to report on material sustainability matters, including climate-related risks.

These are not criminal laws, but they set expectations that make vague or inflated sustainability claims more likely to be questioned by regulators, investors, and the public.

(Source: SC Malaysia; BNM; Bursa sustainability guidance)

Enforcement Landscape

To date, publicly available commentary notes no reported enforcement cases explicitly framed as greenwashing in Malaysia, although misleading claims can be pursued under broader marketing and consumer protection laws such as the CPA and MCAP.

Legal and policy commentators suggest that clearer, more explicit rules or guidance on environmental claims may emerge as ESG reporting expectations and public scrutiny increase.

(Source: EconWorks; NST Malaysia; The Edge Malaysia insights)

Key Malaysian Sustainability & ESG Frameworks to Know

For Malaysian businesses, greenwashing risk often arises in how you describe sustainability to customers and capital providers. Key frameworks include:

• Consumer Protection Act 1999 (CPA) – Catches misleading or deceptive conduct and false representations, including environmental claims.
• Malaysian Code of Advertising Practice (MCAP) – Requires clear, specific environmental claims backed by evidence.
• SRI Taxonomy (Securities Commission Malaysia) – Helps align “sustainable” labels in the capital market and reduce greenwashing in investment products.
• CCPT (Bank Negara Malaysia) – Pushes banks to classify green and transition financing consistently, reducing room for overstated “green” lending.
• Bursa Malaysia Sustainability Reporting – Increasingly scrutinises boilerplate or overly promotional sustainability statements in listed companies’ reports.

Together, these frameworks mean that greenwashing isn’t just a marketing issue; it touches product claims, financing, and corporate reporting.

Business Impact of Greenwashing on Malaysian Companies

Reputational Damage and Trust Erosion

• Once exposed, greenwashing damages credibility, especially online and among environmentally aware consumers. 
• Studies link greenwashing to lower trust, weaker brand equity, and more negative word of mouth.

(Source: Systematic literature on greenwashing and trust)

Regulatory and Legal Risk

• Misleading claims may attract action under the CPA or MCAP. 
• Consequences can include fines, corrective advertising, and orders to change marketing or disclosure practices.

(Source: CPA enforcement context)

Investor and Partner Confidence

• Investors increasingly rely on sustainability disclosures and third-party verification. 
• Vague or inflated claims can raise red flags, limiting access to capital or partnerships and increasing due diligence questions.

(Source: ESG framework discussions, investor guidance on greenwashing)

Internal Operational Costs

• When marketing outpaces real sustainability performance, companies face crisis communications, rework, and internal accountability issues. 
• Resources are pulled away from genuine improvements toward damage control.

Business Risk vs Impact Table

Common Aspects of Greenwashing

Greenwashing can show up across branding, marketing, and reporting. Key patterns include:

1. Vague or Undefined Claims

• Terms like “natural”, “green”, or “eco-friendly” with no clear meaning or supporting data.
• No explanation of what is measured, against which standard, or over what time frame.

(Source: Sunview Malaysia; Investopedia)

2. Selective Disclosure

• Highlighting a small green initiative while hiding larger environmental impacts.
• Focusing on packaging, for example, while core production remains highly polluting.

(Source: Greenpeace)

3. Misleading Visuals and Branding

• Heavy use of green colours, leaves, and nature imagery that implies environmental benefits not backed by evidence.

(Source: Business News Daily)

4. Fake or Self-Created Certifications

• “Badges” or logos created by the company itself, or certifications from non-credible bodies, that look official but have weak standards.

(Source: NRDC)

5. Future-Focused Promises Without Current Proof

• Net-zero or climate pledges with no credible roadmap, milestones, or interim reporting.
• Long-term ambitions used to distract from current high-impact activities.

(Source: ACCA Global)

General Examples of Greenwashing

Without naming specific companies, typical examples include:

• Consumer goods marketed as “green” because of recyclable packaging, while ingredients remain harmful (unsustainable farming practices, excess waste generation, etc).
• A sustainability report highlighting one pilot project while omitting major emissions sources.
• Tourism operators pushing towel reuse to guests while giving no data on energy or water use.
• “Sustainable” or “ESG” financial products that lack clear impact criteria or independent verification.

(Source: Greenpeace; Investopedia; AIGCC greenwashing guidance)

Greenwashing vs Genuine Sustainability

Greenwashing tends to be:

• Driven by marketing communications
• Vague, absolute, or unsupported
• Focused on image rather than evidence

Genuine sustainability tends to be:

• Based on clear, measurable goals
• Supported by transparent reporting
• Subject to third-party verification and internal accountability

(Source: ACCA Global; global ESG reporting practice)

How Malaysian Consumers and Businesses Can Spot Greenwashing

Seek Specifics

Look for quantifiable metrics, defined scopes (e.g. “operations in Malaysia”), and time-bound targets instead of generic promises.

Verify Through Third Parties

Prefer recognised external certifications, credible eco-labels, and independent audit reports. Be cautious with labels you have never heard of.

Check Consistency

Compare what a company says in its ads, website, sustainability report, and actual operations. Consistent, aligned information is more trustworthy than big claims in one place and silence elsewhere.

Question Omissions

Ask what’s missing. If only one initiative is highlighted and there is no information on bigger impacts (such as emissions, energy use, or supply chain practices), treat the claim with caution.

(Source: NRDC; Sunview Malaysia; NGO guidance)

Practical Steps for Malaysian SMEs to Avoid Greenwashing

Many SMEs want to “go green” but worry about overclaiming. These steps help you communicate progress without misleading:

• Start with what you can measure: Use simple, verifiable metrics such as percentage reductions in electricity use, waste, or packaging.
• Document every claim: For each environmental statement, keep a short note and supporting evidence (bills, audit reports, certificates). This helps if partners, customers, or regulators ask questions.
• Use recognised standards: Where possible, use established third-party certifications instead of creating your own “green” logo. If you do use an internal label, clearly explain your criteria.
• Align words and actions: Before launching a campaign, check that your operations, procurement, and policies actually reflect what you are saying. Fix gaps in practice before promoting them.
• Be honest about progress: It is better to say “we are at the beginning of our sustainability journey” with specific steps and timelines than to pretend you are further along than you are.

These practices reduce regulatory and reputational risk and help you build a sustainability story that people can believe.

Greenwashing and Your Business

Greenwashing may seem like a shortcut to appear responsible while maintaining profits, but it weakens trust, creates regulatory and investor risk, and hides real sustainability progress. Malaysian companies that prioritise transparency, credible data, and verification will be better placed to earn the confidence of consumers, investors, and partners.

If your organisation needs help shaping clear, credible sustainability narratives that resonate with your audience without falling into greenwashing pitfalls, PRESS PR Agency offers PR services to help brands communicate sustainability confidently and effectively.

Our team combines local Malaysian market insight with global ESG and communications best practices to help you avoid greenwashing traps and build long-term credibility.

Important Note: This guide is for general information only and does not constitute legal, financial, or professional advice. Regulations and industry standards around sustainability and green claims are evolving. For specific questions about your organisation’s obligations, seek advice from a qualified legal, ESG, or compliance professional familiar with Malaysian law and your sector.