Greenwashing

Typical forms include vague labels such as “eco-friendly”, selective facts that leave out larger harms, offsets used to support carbon-neutral claims, and funds named as sustainable while holding few such assets. The same pattern applied to the wider ESG label is sometimes called ESG washing. Regulators, advertising bodies and courts in many countries now treat it as a consumer protection and market conduct issue, and fines and orders to withdraw claims have followed. Greenwashing risk is the chance that a claim is judged misleading, with legal, reputational and financial effects. The usual defence is substantiation: keeping evidence, such as data, method and third-party checks, that proves each claim before it is made. Compliance and legal teams review marketing and reports for it. Regulators judge a claim by the evidence held when it was made, so a claim without a file is the first thing an enforcement team asks to see.

A consumer goods company labels a bottle “100% recyclable”. A review finds that the cap is made of a plastic few facilities accept, and the claim has no evidence file. The compliance team asks marketing to produce test data, narrows the wording to the parts that qualify, and adds an evidence check before any green claim is approved.