The findings from ESG data technology firm RepRisk indicate a 12% decrease in greenwashing risk globally across all sectors during the year ending in June 2024.
This is likely the result of increased regulatory measures and companies engaging in ‘greenhushing’, according to the researchers, with firms fearful of pushback from consumers, investors, and regulators.
However, despite an overall decline, high-risk cases surged by over 30% during the last year, while nearly 30% of companies linked to greenwashing in 2023 were repeat offenders in 2024.
“Stakeholders are more aware of greenwashing risk than ever before,” said Dr Philipp Aeby, CEO of RepRisk.
“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.”
The greenwashing identified includes criticism of an advertising campaign deceiving consumers on environmental impacts, findings that show a company is overstating the impact of an initiative, or coverage of company actions in direct contrast to climate commitments.
The UK saw a relatively modest reduction in incidents of 4%, whereas there was a 20% decline in the EU following the proposition of the Green Claims Directive.
Greenwashing cases in the US peaked in 2022, with 503 incidents – a 35% year-over-year increase from 2021 – which was followed by a 10% decline in 2023 and a modest 6% rise in 2024.
One possible explanation for the divergence in the US might be the increasing politicisation of ESG, according to the researchers, with firms becoming more cautious about promoting their green credentials.
The findings also show a 20% decrease in greenwashing in the banking and financial services sector, following a 70% increase the previous year.
Just over a third of financial companies linked to greenwashing last year were also linked to greenwashing in 2024, slightly above the 30% average across all sectors.
“Greenwashing is often driven by corporate narratives,” Dr Aeby continued. “To uncover it, investors and companies should rely on what external sources reveal about these claims.”
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Chris Seekings is the Deputy Editor of IEMA’s Transform magazine, which is published biomonthly for IEMA members. Chris’s role involves writing sustainability-related news, features and interviews, as well as helping to plan and manage the magazine’s other day-to-day activities.