RepRisk’s third annual greenwashing report has found a 12% decrease in greenwashing risk globally across all sectors, the first decrease in six years.
Reprisk says the decline is likely the result of increased regulatory measures and companies engaging in greenhushing out of fear of pushback from stakeholders, especially consumers, investors, and regulators. While the prevalence of incidents has fallen, the number of severe greenwashing cases has increased by 30%.
The report also signals a significant shift in the greenwashing landscape of Banking and Financial Services. While the sector experienced a 70% increase in climate-related greenwashing from 2022 to 2023, the report shows a 20% decrease in incidents globally across the sector from 2023 to 2024. Greenwashing cases in the US peaked in 2022, with 503 incidents – a 35% year-over-year increase from 2021. This was followed by a 10% decline in 2023 and a modest 6% rise in 2024.
RepRisk captures greenwashing through the intersection of two criteria: (1) misleading communication and (2) an environmental issue such as local pollution or impacts on ecosystems and biodiversity. ESG risk incidents in this scope may include criticism of an advertising campaign deceiving consumers on environmental impacts, research findings revealing that a company is overstating the impact of an initiative, or coverage of company actions in direct contrast to climate commitments.
RepRisk determines severity as a function of three dimensions: firstly, the consequences of the risk incident (e.g., the scale of actual environmental repercussions relative to the green claims); secondly, the extent of the impact (e.g., one person, a group of people, a large number of people); and thirdly, whether the risk incident was caused by accident, negligence, or intent, or even in a systematic way. There are three levels of severity: low severity, medium severity, and high severity.
Dr. Philipp Aeby, CEO and Co-Founder of RepRisk, said, “Stakeholders are more aware of greenwashing risk than ever before. While regulators have successfully pushed forward legislation to deter greenwashing, the risk will keep evolving as new forms emerge, leaving companies open to reputational damage which impacts their bottom line. Greenwashing is often driven by corporate narratives. To uncover it, investors and companies should rely on what external sources reveal about these claims.”
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