Oops: European finance is the dirtiest with greenwashing
In the last year, cases of "greenwashing" by banks and financial companies have grown by 70 percent and are especially frequent in Europe. What the new RepRisk report says
Between September 2022 and September 2023, incidents of greenwashing – or misleading communication about the alleged positive environmental impacts of an activity or investment – by banks and financial services companies grew by 70 percent globally. In most cases, this greenwashing consists of misleading communications about relationships with the fossil fuel industry. European financial institutions were the ones most frequently adopting this malicious practice, being involved in 106 cases of greenwashing out of the 148 recorded in the period in question.
FROM 86 CASES TO 148
These are the main findings of a report carried out by RepRisk , a company that evaluates the environmental, social and governance (ESG, in jargon) sustainability factors of financial operations. Between September 2022 and September 2023 it identified 148 episodes of greenwashing in the banking and finance sector, compared to 86 cases in the previous twelve months.
WHAT IS GREENWASHING FOR
The objective of greenwashing is to improve the image of a company or institution in the eyes of customers, who have become more sensitive to the climate and environmental crisis.
At the moment, however, a precise definition of what constitutes greenwashing is missing: RepRisk labels in this way a company's misleading communications, such as exaggerations about the positive environmental impact of a certain initiative. Regulatory authorities – including those of the European Union – would like to counter greenwashing practices in order to increase investor confidence and channel more resources towards projects that truly contribute to climate sustainability.
The ambiguity on the net zero emissions objectives, the differences in approach and the lack of reference regulatory frameworks increase the risk of greenwashing by companies, explained a study from the beginning of 2023 – entitledCorporate Climate Responsibility Monitor 2023 – carried out by NewClimate Institute and Carbon Market Watch.
Companies that are truly “leaders in the fight against climate change,” we read in the Monitor , “struggle to distinguish themselves from those that make a smaller commitment. Only a small minority of companies, including Maersk and Stellantis, are making potentially credible commitments to significant decarbonisation by 2030 and beyond. However, these companies are placed on the same level as others, including American Airlines, Carrefour, Deutsche Post DHL, Fast Retailing (Uniqlo), Inditex (Zara), Nestlé, PepsiCo, Volkswagen and Walmart, who make similar statements and mention their own SBTi certifications in defense of climate strategies that in reality show a very limited commitment to reducing emissions".
FINANCE AFTER OIL & GAS
“Over 50 percent of these climate greenwashing incidents mentioned fossil fuels or linked a financial institution to an oil and gas company,” RepRisk writes. “These incidents are not isolated and regulators are increasingly aware of the scope of the problem.”
Neither the European Banking Federation nor UK Finance, two organizations representing the European banking industry, responded to requests for comment from Reuters .
In the RepRisk report, the banking and financial services industry was second only to the hydrocarbon sector in terms of number of greenwashing episodes.
SOCIAL WASHING
In addition to greenwashing , RepRisk also analyzed the social washing of companies, i.e. the tendency to hide the social critical issues of their activities – violations of human rights, impacts on local communities – to safeguard their reputation.
“Misleading communication on environmental and social issues not only impedes progress toward collective goals,” RepRisk writes in the report, “but also damages consumer and investor confidence.”
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/banche-greenwashing-report-reprisk/ on Sun, 08 Oct 2023 05:59:41 +0000.