RepRisk’s recent study reveals a shift in greenwashing trends, marking the first decrease in such cases in six years. This is a positive development for sustainable companies and advocates of sustainability. Although this decline suggests possible advancements, a worrisome increase in serious instances of greenwashing has also been observed.
The result shows how important it is for businesses to use ESG tools to simplify the process of ESG compliance with the ever-evolving regulations.
RepRisk report reveals changes in greenwashing trends
An ESG data science company, RepRisk, used big data technology to conduct the research. They tracked over 150,000 public sources, including blogs, media sites, and government agencies. Using this data, an annual greenwashing report was published in the year ending in June 2024, which shows a 12% decrease in the overall number of greenwashing cases observed. This is the first decline since 2019 and reflects the effects of increased regulatory pressure.
Not all news, though, is good. There has been a 30% increase in high-severity greenwashing cases. This can be the effect of corporate misconduct. The degree of impact, purpose, and systematic nature of misleading claims characterise these serious examples.
Europe leads in reducing greenwashing
Another significant finding from RepRisk is the difference in greenwashing trends across regions. Greenwashing in Europe has dropped sharply by 20%. New rules like the Green Claims Directive and the Empowering Consumers Directive might be the reasoning for this. These rules require companies to provide clear and verifiable environmental claims. A company that fails to do so is met with tough penalties.
These changes highlight how important it is for businesses in Europe to adopt accurate ESG reporting practices.
Related Articles: EU Tightens ESG Fund Labeling Rules to Combat Greenwashing | Fashion Greenwashing: A Deceptive Trend
Industry-specific findings
RepRisk’s annual greenwashing report also broke down greenwashing trends by industry. Oil and gas, for example, topped the list of offenders. Oil and gas is followed by food and beverages, followed by banking and financial services, although the latter saw a 27% drop in cases in the past year. Industries like retail, personal goods, mining, and utilities also show improvements.
The growing importance of reliable ESG solutions
Dr. Philipp Aeby, CEO of RepRisk, noted that: “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.”
He also suggested that businesses must rely on external data sources to verify their sustainable claims. This makes adopting reliable tools even more important. With Klimado, greenwashing in business can be avoided as this platform simplifies ESG reporting.
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This article is referenced from Greenwashing Cases Fall for First Time in Six Years as Regulatory Scrutiny Builds: RepRisk by ESG Today
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — Cover Photo Credit: Kateryna Hliznitsova
