New research from RepRisk finds that one in four climate-related ESG risks was linked to greenwashing in the year to September, an increase from one in five in last year’s report.
The report also finds that 31% of publicly listed companies linked to greenwashing from September 2018 to September 2023 were also linked to social washing. The banking and financial services sectors saw a 70% increase in the number of climate-related greenwashing incidents in the last twelve months. Over 50% of these climate-specific greenwashing risk incidents either mentioned fossil fuels or linked a financial institution to an oil and gas company.
According to RepRisk, the most common social washing issue in both the UK and US is human rights abuses and corporate complicity, which accounts for 26% and 25% of each nation’s incidents respectively. However, diversity is still a key issue – in the US 18% of social washing incidents are linked to either social discrimination or discrimination in employment – compared to 11% in the UK. In the US, 44% of public companies linked to greenwashing also have a record of social washing, compared to 39% in the UK and 31% globally.
Dr Philipp Aeby, CEO and Co-Founder of RepRisk says, “The expectation of competitive advantage derived from an image of sustainability has opened the door to green and social washing. A lack of accountability around a rapidly evolving landscape of corporate sustainability has helped keep this door open for a long time. Despite this, in recent years symbolic sustainability has backfired for many as the media, public, and regulators criticize unfounded claims. Banks, asset managers, investors, and other market participants need transparent data on adverse impacts to assess a company’s true business conduct and mitigate green and social washing risk in their portfolios and supply chains,”