Third of greenwashing companies also linked to social washing, new data shows

Almost a third of companies worldwide linked to greenwashing also have a record of social washing, new data shows.

The figures, from the world’s largest ESG data science company RepRisk, suggest corporate greenwashing and social washing are often connected.

Social washing is a term used for when companies make misleading claims around their social impact, including issues like discrimination, human rights and employment conditions.

The new data, released on Tuesday, found that 31% of public companies linked to greenwashing from September 2018 to September 2023 have also social washed – a proportion which increases for UK companies at 39% and for US companies at 44%.

It also found that 55% of greenwashing risk incidents globally have a social component.

The most common social washing issue in both the UK and US is human rights abuses and corporate complicity, which accounts for 26% and 25% of each nation’s incidents respectively, according to the data.

Diversity is also a key issue, with 18% of social washing incidents in the US and 11% in the UK linked to either social discrimination or discrimination in employment – compared to 11% in the UK.

Overall, greenwashing incidents have accelerated globally this year, particularly in Europe and the Americas as well as the banking and financial services sectors.

In the past 12 months, the banking and financial services sectors saw a 70% increase in the number of climate-related greenwashing incidents, the figures show.

More than 50% of these climate-specific greenwashing risk incidents either mentioned fossil fuels or linked a financial institution to an oil and gas company.

Dr Philipp Aeby, chief executive and co-founder of RepRisk, 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.

“Despite this, in recent years symbolic sustainability has backfired for many as the media, public, and regulators criticize unfounded claims.

“Banks, asset managers, investors, and other market participants need transparent data on adverse impacts to assess a company’s true business conduct and mitigate green and social washing risk in their portfolios and supply chains.”

RepRisk uses Artificial Intelligence alongside human intelligence to analyse publicly available information from around the world and identify material risks from businesses’ conduct.

The firm said it identifies greenwashing through the intersection of misleading communication and an environmental issue such as local pollution or impacts on landscapes, ecosystems and biodiversity.