Exploring the first decline in six years, RepRisk has published a leading report on the significant shifts taking place within the industry on greenwashing. In their report, they have identified two important findings:

• Overall Decrease in Greenwashing Cases: For the first time in six years, there has been a decline in the total number of greenwashing cases.
• Increase in High-Risk Cases: Despite the overall decrease, high-risk greenwashing cases have surged by over 30%.

Drilling down into the details, RepRisk has highlighted some important trends by sector and region. Sectoral shifts highlighted the ongoing challenges the Oil and Gas sector most frequently associates with greenwashing. The food and Beverage sector is under rising scrutiny, with notable cases like Coca-Cola facing lawsuits. The Banking and Financial Services sector saw a 20% global drop in climate-related greenwashing incidents.

Regionally, RepRisk flags Europe and North America as continuing to have the highest number of greenwashing incidents, while the EU saw a 20% decline in greenwashing cases.  However, overall, Europe and North America identified high-severity incidents rising by 27%.

High-severity greenwashing cases are driven by:

1. Major Misrepresentations: Companies making bold, false claims about their environmental impact or sustainability practices.
   
2. Legal Actions: Many high-severity cases have led to lawsuits and regulatory actions, particularly in sectors like Oil and Gas and Food and Beverage.
   
3. Consumer Backlash: There has been a notable rise in consumer awareness and backlash against companies caught in high-severity greenwashing.
   
4. Regulatory Scrutiny: Stricter regulations are being enforced, requiring companies to provide credible evidence for their environmental claims, leading to increased accountability.

High-severity greenwashing cases often involve several deceptive tactics, including:

1. Selective Disclosure: Highlighting only the positive aspects of their environmental practices while omitting negative impacts.
   
2. Misleading Labels: Using terms like “eco-friendly” or “green” without proper certification or evidence.
   
3. False Certifications: Displaying fake or misleading environmental certifications to gain consumer trust.
   
4. Complex Jargon: Using technical or scientific language to confuse consumers and obscure the truth.
   
5. Token Actions: Implementing minor, superficial changes and presenting them as significant environmental achievements.

These tactics are designed to create a false impression of sustainability and can lead to significant legal and reputational consequences for the companies involved.

Growing and intensified regulatory scrutiny, particularly in the EU, is driving the decline in greenwashing cases in which new regulations require companies to provide credible evidence for environmental claims, leading to increased accountability. However, RepRisk equally warning of the dangers of greenhushing, where companies understate their sustainability efforts to avoid legal risks. 

The growing body of regulations are now requiring companies to provide credible evidence for environmental claims, leading to increased accountability. Help is at hand, with common sense strategies to address the risk.  To avoid greenwashing, companies can take several key steps:

• Be Transparent: Clearly communicate your environmental impacts, plans, and progress. Avoid vague language and be specific about your claims.^[1]How companies can protect themselves from greenwashing
  
• Align Actions with Commitments: Ensure that your sustainability commitments are backed by concrete actions and investments. This includes setting and working towards science-based targets^[2]How companies can protect themselves from greenwashing
  
• Verify Claims: Use third-party verification to substantiate your environmental claims. This can involve using carbon accounting platforms to accurately capture and report data.^[3]How companies can protect themselves from greenwashing
  
• Engage Stakeholders: Involve stakeholders in your sustainability initiatives. This includes educating employees, suppliers, and consumers about your environmental efforts and progress.^[4]How companies can protect themselves from greenwashing
  
• Avoid Misleading Claims: Refrain from making false or exaggerated claims about your environmental practices. Ensure that all marketing and communication accurately reflect your sustainability efforts.^[5]How companies can protect themselves from greenwashing

By following these principles, companies can build trust with consumers and genuinely contribute to environmental sustainability.

To discuss how HKA Environment and Climate experts can help you in times of dispute or advisory, please get in touch with Dr Alexander Lee (alexlee@hka.com) or Andrew Walters (andrewwalters@hka.com). They would be delighted to speak with you.

About the Author

Andrew Walters is a highly experienced Environmental Lawyer with over 25 years of experience in an extensive range of projects and policy work in the public and private sectors. He is actively involved in both disputes and advisory.