Reporting by Tommy Reggiori Wilkes
Enhancing by Mark Potter, Jan Harvey and Aurora Ellis
LONDON, Oct 3 (Reuters) – The number of situations of greenwashing by financial institutions and money services businesses all-around the world rose 70% in the past 12 months from the preceding 12 months, a report on Tuesday confirmed.
European money establishments accounted for most of those people cases, and considerably of the greenwashing involved claims about fossil fuels.
Environmental, social and governance (ESG) details company RepRisk recorded 148 conditions from the banking and economical providers marketplace globally in the 12 months to the conclude of September 2023, up from 86 during the former 12 months.
Of the 148 conditions, 106 have been by European money institutions.
The European Banking Federation mentioned RepRisk’s report comprised allegations instead than verified claims of greenwashing.
Greenwashing entails an organisation creating deceptive sustainability-related statements to investors or people, normally to enhance its name and base line.
Regulators want to stamp out greenwashing to enhance client and investor self-assurance and enable persuade a lot more funds to sustainable investments, despite the fact that there is no authorized definition of what greenwashing is however.
RepRisk, which suggests it has facts going back again to 2007, considers greenwashing to have happened when a firm can make misleading communications on the setting.
It looks for these conversation by analysing public sources of information and facts and stakeholders, rather than the information and facts providers have published. For example, research results revealing that a organization has overstated the effect of an initiative would be tallied as a case of greenwashing.
“Around 50% of these weather-certain greenwashing hazard incidents possibly mentioned fossil fuels or connected a money institution to an oil and fuel enterprise. These incidents are not going on in isolation and regulators are more and more conscious of the scale of the dilemma,” RepRisk claimed.
European Banking Federation (EBF) reported the increase in greenwashing statements could be connected to enhanced scrutiny of banking institutions and their sustainability commitments, instead than deliberate misrepresentations by loan providers.
Banks participate in a critical position funding companies’ decarbonisation endeavours, which includes in higher-emission industries, the EBF reported. The “notion of changeover finance is not effectively-outlined, and this absence of clarity can direct to unsubstantiated greenwashing accusations,” a spokesperson added in an emailed statement.
United kingdom Finance, which signifies the banking and finance sector, said in a assertion that firms throughout the sector had set environmental and social responsibility “at the main of their techniques”. It is performing with regulators on transparency and ESG solution labelling, it extra.
European Union watchdogs in June put forward a “typical superior-stage understanding” of greenwashing and mentioned banking companies, insurers and investment decision firms throughout the bloc experienced made “deceptive claims” about their sustainability credentials to buyers.
The banking and economical providers industry is second only to oil and fuel for the amount of greenwashing incidents, RepRisk said.
The data company discovered that greenwashing more broadly was on the rise.
One particular in each 4 climate-associated ESG hazard incidents was connected to greenwashing, an increase from 1 in 5 final 12 months, it explained, though it also located that just one in three businesses tied to greenwashing was also embroiled in so-called “social washing”.
It described social washing as companies presenting on their own positively by “obscuring an underlying social situation” – these as human legal rights abuses and corporate complicity, or impacts on communities – to shield their track record and fiscal efficiency.
“Deceptive conversation all around environmental and social subjects not only impedes progress to collective aims, but also damages have faith in with shoppers and buyers,” RepRisk wrote in its most up-to-date report.
Reporting by Tommy Reggiori Wilkes
Our Standards: The Thomson Reuters Believe in Rules.