Bank / Credit Union

Banks see big jump in 'greenwashing'

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October 3, 2023

Banks have increasingly engaged in greenwashing, a term for making misleading claims about sustainability efforts to investors or consumers. In fact, the number of greenwashing instances rose by 70% in the last 12 months to 148 cases, according to a report by Reuters.

Many of this greenwashing revolved around claims about fossil fuels. RepRisk has been tracking greenwashing since 2007 by analyzing publicly available data.

"Over 50% of these climate-specific greenwashing risk incidents either mentioned fossil fuels or linked a financial institution to an oil and gas company. These incidents are not happening in isolation and regulators are increasingly aware of the scale of the problem," RepRisk said in a press release.

The firm says banks ranked second for these claims, just behind oil and gas companies.

"Misleading communication around environmental and social topics not only impedes progress towards collective goals, but also damages trust with consumers and investors," RepRisk said in its study.

"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," Philipp Aeby, CEO and co-founder of RepRisk, said in the release. "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."