A new report out Tuesday showed that the number of cases of greenwashing by banks and financial services companies across the globe increased 70% over the past year compared to the same period one year prior.
Most instances were attributable to European financial institutions, with much of the greenwashing pertaining to claims about fossil fuels.
In the report, the environmental, social and governance (ESG) data firm RepRisk documented 148 instances of greenwashing from the banking and financial services industry across the world in the 12 months to the end of September 2023. It marked an increase from 86 cases recorded during the previous 12 month period. The report noted that 106 of the 148 cases were performed by European financial institutions.
The report describes greenwashing as an organization misleading investors or consumers with unsupportable sustainability claims which are designed to improve its reputation or profitability.
RepRisk said, “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.”
In June, European Union watchdogs warned that banks, insurers, and investment firms throughout the EU had misled investors about their sustainability efforts.
RepRisk noted that the banking and financial services industry was second only to the oil and gas industry with regards to the number of incidents of greenwashing.
Overall, RepRisk found the the number of instances of greenwashing was increasing.
The data firm also found that one in three companies which were involved in greenwashing were also involved in “social washing.” Social washing was defined as misleading investors or consumers by obscuring an underlying social issue, such as abuses of civil or human rights, or negative impacts on communities, in order to protect a reputation or financial performance.
RepRisk wrote, “Misleading communication around environmental and social topics not only impedes progress towards collective goals, but also damages trust with consumers and investors.”
