RepRisk study reveals an increase in greenwashing

The research shows that one in four climate-related ESG risk incidents globally is linked to greenwashing, while approximately one in three public companies related to greenwashing is also associated with social washing.

According to RepRisk’s officials, the expectation of competitive advantage derived from an image of sustainability introduced green and social washing, with the lack of accountability maintaining them in a rapidly evolving landscape. However, symbolic sustainability fails for many companies as the media, public, and regulators continue to criticise unfounded claims. Banks, asset managers, investors, and other market players require transparent data on the negative impacts to assess a company’s business conduct and mitigate green and social washing risks in their portfolios and supply chains.

In both the UK and the US, RepRisk found that the most common social washing issues are human rights abuses and corporate complicity, accounting for 26% and 25% of each nation’s incidents. Diversity remains one of the main problems, with the US having 18% of incidents linked to either social discrimination or discrimination in employment, compared to 11% in the UK. Data shows that 55% of greenwashing risk incidents have a social component. This is demonstrated by the fact that 44% of US public companies linked to greenwashing also have a record of social washing, compared to 39% in the UK and 31% globally.

Moreover, the study highlights that while greenwashing incidents accelerated around the world, the practice experienced significant growth in Europe and the Americas, especially in the banking and financial services sectors. During the past year, these industries saw a 70% increase in the number of climate-related greenwashing incidents, with over 50% of them either mentioning fossil fuels or linking a financial institution to an oil and gas company. As these issues are not isolated, regulators become aware of the scale of the problem.

Founded in 1998 and based in Switzerland, RepRisk analyses and researches business conduct risks by leveraging a combination of AI and machine learning with human intelligence. Through this, the company systematically examines public information and identifies material business conduct risks. RepRisk’s expertise extends to cover 240,000 public and private companies and 65,000 infrastructure projects, in 23 languages. 

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