The financial and banking sectors saw a 70% increase in the number of climate-related greenwashing incidents in the past year, finds new research from RepRisk.
Over 50% of these climate-specific greenwashing risk incidents either mentioned fossil fuels or linked a financial institution to an oil and gas company.
Around one in four climate ESG risk incidents are linked to greenwashing, an increase from one in five in last years report.
The report also highlighted one in three public companies linked to greenwashing are also associated with social washing – when companies make misleading claims about their social responsibility, painting themselves in a positive light while obscuring an underlying social issue.
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According to RepRisk’s findings, the most common social washing issue in both the UK human rights abuses and corporate complicity, which accounts for 26%.
Diversity also a key issue in the UK where 11% of social washing incidents are linked to either social discrimination or discrimination in employment.
Green and social washing are often connected, with 55% of greenwashing risk incidents globally having a social component. In the UK, 39% of public companies linked to greenwashing also have a record of social washing.
RepRisk CEO and co-founder Dr Philipp Aeby said: “The expectation of competitive advantage derived from an image of sustainability has opened the door to green and social washing.
“A lack of accountability around a rapidly evolving landscape of corporate sustainability has helped keep this door open for a long time,” he added.
“Despite this, in recent years symbolic sustainability has backfired for many as the media, public, and regulators criticize unfounded claims,” Aeby continued.