Boo hoo... Time's up for Greenwashers

Greenwashing scandals continue to hit the headlines with fresh examples of greenwashing appearing in the news daily – Pretty Little Thing and its parent company Boohoo, for instance, have once again had their green credentials questioned.

Whilst typically this attention has been confined to media reporting, calling brands out for making misleading environmental claims, we are now beginning to hear of raids, investigations and, now, legal disputes. Warnings are quickly turning into fines and regulatory action, with regulators referring to arguments made in private litigation to hold organisations to account about material misstatements and omissions on sustainability. 

As was reported by our colleagues, Emily Sutton and Kerry Stares, the FCA is shaping up to take more direct action: it has issued guidance on ESG and greenwashing and is also looking towards alternative investments, warning in an August letter that private equity firms and hedge funds offering ESG products will also be subject to scrutiny.

The recent police raid of the Frankfurt offices of Deutsche Bank and DWS (Deutsche Bank’s asset management unit) as part of a probe into allegations that the asset manager overstated its sustainability capabilities has caught many in the investment world by surprise. Notably, those allegations were first made by DWS’ former Chief Sustainability Officer. The investigation involved prosecutors from Frankfurt, federal police and BaFin (the German financial regulator.) Within hours of the raid the CEO of DWS, Germany’s largest asset manager, had resigned and the quarter during which the raid took place saw DWS’ clients pull circa 25 billion euros of investment.

Outside of the investment world, the fashion industry is under intense scrutiny as the Competition and Markets Authority (CMA) probe concerns over greenwashing in the clothing industry. The CMA have announced they would be specifically investigating environmental claims made by ASOS, Boohoo and George at Asda. As part of the investigation, they will look into whether statements and language used by the businesses are too broad and vague, and may create the impression that clothing collections are more environmentally sustainable than they actually are.

Litigation is a tool which is now also being used to force companies and public bodies to stamp out greenwashing practices. This week it was reported that the European Commission is facing legal action from Greenpeace and other environmental groups over its inclusion of gas and nuclear energy in its list of green investments. This follows reports that Austria and Luxembourg are also preparing legal action over the same issue.

Lastly, in the technology world a recent survey has found that nine in ten technology leaders say companies are guilty of greenwashing. The research surveyed 550 technology executives from 11 different countries showing the global scale of the problem. Of particular note is that almost half (44%) of those surveyed believe every company within the industry is greenwashing.

As the global greenwashing crackdown begins across multiple sectors and in numerous countries, and the warning sounds have translated to regulatory action, those companies and brands who continue to inflate their green commitment and credentials will be sailing awfully close to the wind.