Greenwashing: The Effects Of Ecological Virtue Signaling

As the world at large moves towards compliance with environmental, social, and governance (ESG) principles, it is inevitable that some companies will try to ‘game the system’ to better appeal to their respective industries without incurring the costs associated with such changes.

It’s a practice commonly known as ‘greenwashing’ and as noted by Nigel Brook, partner, and Zaneta Sedilekova, associate, at Clyde & Co, the intentions of those engaging in greenwashing can range from the simply misguided to the outright malicious. Whatever the motivations may be, however, one thing’s for certain -- it has ramifications.

‘Greenwashing can take many forms, all of which share the same feature -- misrepresentation about the green credential of the company, intentional or otherwise,’ Brook said in conversation with Insurance Business’s Corporate Risk channel.

‘The typical examples of greenwashing include misleading advertisements that can result in a breach of consumer protection laws, or incomplete/inadequate disclosures in company prospectus, which may lead to securities litigation by shareholders.’