Greenwashing is now a global issue

European research has found that up to 30% of multinationals provide incorrect data on emission levels, with the biggest culprits being in the energy and resources sector. While the European Commission has found that 42% of claims by companies were exaggerated, false or deceptive. In Asia, the problem is also widespread. For example, companies may seek to promote “clean coal” where they use carbon capture technology but fail to highlight that the effectiveness of the technology in remediating greenhouse gas emissions is questionable. Similarly, automotive producers in Thailand, Vietnam and Indonesia keen to promote electric vehicles may not mention how much coal is used in the generation of some parts of their vehicles. 

Much of the international action on greenwashing has focused on investment companies and how they choose to label their funds. For example, German prosecutors recently raided the headquarters of Deutsche Bank in relation to its asset management arm DWS. The United States Securities and Exchange Commission has also brought charges of misrepresentation against BNY Mellon Investment Advisor on the basis of greenwashing. As a result, The Securities and Exchange Commission is proposing that investors need to invest at least 80% of their assets in “clean” or “ESG” assets to use that terminology in a fund’s name. 

The Australian Securities and Investment Commission (ASIC) is also increasing its focus on greenwashing, releasing Information Sheet 271 recently. This outlines nine guiding questions for organisations to consider when making disclosures to investors. These include guidance on terminology, labelling, methodologies or policies for integrating sustainability considerations, influence over the benchmark index and the use of metrics and sustainability targets. The focus is on misleading statements and disclosure obligations for funds managers, but these could potentially be extrapolated to organisations seeking to promote ESG policies or activities.  

Steps have been made towards change by the International Sustainability Standards Board that was established at COP26. Two Disclosure Standards for sustainability financial disclosures have been released:
●    IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information; and
●    IFRS S2 Climate-related Disclosures.   

Together they seek to require disclosures to include information on governance processes, controls and procedures as well the organisation’s strategy to address climate and sustainability-related risks and opportunities. It is expected that ASIC and other jurisdictions will adopt these recommendations in the future.

The Deputy Chair of the Australian Competition and Consumer Commission (ACCC), Delia Rickard, has also indicated that they’re reviewing how other international jurisdictions are dealing with greenwashing. So we can expect to see more action and enforcement in the coming year. 

While most regulatory changes are happening in western countries, governments in Asia are aware of the issue. In Singapore, the Competition and Consumer Commission has taken gentle steps to invite researchers to bid for grants on sustainability issues including greenwashing. The Public Relations & Communications Association of Southeast Asia has also established a working party to consider setting standards within the industry. While little steps, it indicates that there is increasing focus on greenwashing in Asia and something for all organisations operating in the region to keep an eye on.