RepRisk has reported a notable 12% decline in greenwashing incidents globally across all sectors for the year ending June 2024.
This marks the first reduction in such incidents in six years, primarily driven by heightened regulatory measures and an emerging trend towards greenhushing, where companies reduce overt sustainability claims to avoid backlash from stakeholders like consumers, investors, and regulators.
Despite this overall decrease, the severity and number of high-impact greenwashing cases have escalated by 30%, underscoring the ongoing challenges in this area.
Dr. Philipp Aeby, CEO and Co-Founder of RepRisk, emphasized the evolving nature of greenwashing risks, stating, “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.”
The report highlights a significant shift particularly in the Banking and Financial Services sector, which saw a 20% reduction in greenwashing incidents from 2023 to 2024, following a 70% increase in climate-related greenwashing between 2022 and 2023. This sectorial shift indicates a strong response to regulatory frameworks, notably in the EU, where comprehensive legislation like the Green Claims Directive has been instrumental in compelling companies to substantiate their environmental claims with tangible evidence.
In contrast, the United States displayed a mixed response, with greenwashing cases initially peaking in 2022 followed by a slight reduction. This variability is attributed to the increasing politicization of ESG factors within the region, influencing how companies position their sustainability credentials amid varied political and investor pressures.
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