
Trend 1
Defining Greenwashing
Greenwashing has been a recurring topic for some time, but its prominence in sustainable finance surged when the U.S. authorities initiated an investigation into the ESG claims of Deutsche Bank’s asset management arm, DWS. As we venture into 2023, this issue takes center stage, driving discussions and shaping decision-making processes.
Despite the growing momentum and the serious implications associated with greenwashing, one fundamental question remains: How do we precisely define “greenwashing”?
While different stakeholders may offer varying interpretations, there is a growing call for establishing a common understanding of greenwashing. Institutions like the European Supervisory Authorities (ESAs) and the UK Financial Conduct Authority (FCA) emphasize the need for clarity. Additionally, the European Commission is expected to propose a directive to regulate “green claims” made by organisations.
The call for a clear and shared definition of greenwashing is justified, but one must approach this challenge with caution and objectivity. While the consequences of greenwashing are indeed undesirable, there is a risk of overly severe punishments that could hinder the necessary investments and innovation. It is important to recognize that inaction can also pose significant risks beyond the issue of greenwashing.