It certainly can be. Companies use terms like “organic” and “free-range” loosely, because most consumers have little idea of what they actually mean. Other strategies include putting more pictures of natural imagery on the packaging, and actually using more green coloring to trigger an unconscious connection in the purchaser’s mind, even though there is no change in ingredients.
Rather than looking for this type of green labeling, it’s best to look for smaller symbols that have a definite meaning, like the good old three-arrow recycling logo. For paper products in the US, when the arrows face the opposite direction, it means the product is made from recycled materials. Check out more symbols that have an actual meaning at the link below.
If the product actually is green, then, no, labeling something as green is not always grennwashing. As skpennell pointed out though, companies can be very liberal with what a “green” product actually is.
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