RepRisk Reports First Decline in Greenwashing Incidents in Six Years, Yet Severity Rises
Key Impact Points:
- RepRisk data shows a 12% year-on-year decrease in companies linked to greenwashing, marking a significant shift.
- Despite the decline, severe greenwashing cases surged by over 30%, indicating ongoing challenges.
- Nearly 30% of companies flagged for greenwashing in 2023 were repeat offenders in 2024, highlighting the need for stronger regulation.
RepRisk’s latest research reveals a 12% decrease in global greenwashing risk across all sectors for the year ending June 2024, marking the first decline in six years. This shift is attributed to heightened regulatory measures and companies engaging in “greenhushing” to avoid backlash from stakeholders, including consumers and investors.
Dr. Philipp Aeby, CEO and Co-Founder of RepRisk, noted, “Stakeholders are more aware of greenwashing risk than ever before. 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.”
Despite the overall decline, high-risk greenwashing cases increased by over 30%. Alarmingly, nearly 30% of companies linked to greenwashing in 2023 were also flagged in 2024, indicating that while public perception is shifting, more robust regulation and transparency are essential to address persistent issues.
Related Article: Shein Under Scrutiny: Italian Probe into Greenwashing Claims
The Banking and Financial Services sector saw a notable trend: after a 70% increase in climate-related greenwashing from 2022 to 2023, incidents decreased by 20% from 2023 to 2024. However, 36% of financial companies linked to greenwashing last year were also flagged this year, slightly above the 30% average across all sectors.
Geographically, regulation has played a crucial role in the decline of incidents. The EU led with a 20% reduction, driven by stringent legislation like the Green Claims Directive, which requires companies to substantiate their environmental claims. In contrast, the UK saw a modest 4% reduction, while the US experienced a mixed trend, with greenwashing cases peaking in 2022 and showing a modest rise again in 2024.
The report underscores the need for ongoing vigilance and stronger regulatory frameworks to combat greenwashing effectively and protect corporate reputations.
