Board Priorities in 2025: Greenwashing
16 January 2025
Greenwashing, bluewashing: sustainability under scrutiny
What businesses say about sustainability, and whether their activities live up to this, remains under scrutiny.
2024 saw a number of new laws and regulations come into effect, including the UK Financial Conduct Authority's anti-greenwashing rules. Enforcement actions continued, with Australia proving especially active. However, 2024 also brought political change and uncertainty on target setting and transition plans.
2025 will see a continuation of this. In the UK, the Competition and Markets Authority – an active investigator of greenwashing– will receive powerful new consumer law enforcement powers. A new corporate failure to prevent fraud offence will also come into force in September. A wide range of fraud offences are in scope, including false accounting and false statements by company directors. Government guidance illustrates how environmental and sustainability claims may amount to fraud. The first EU Corporate Sustainability Reporting Directive reports will be produced by in scope companies in 2025.
The focus of many greenwashing allegations and investigations to date have been on environmental statements, often relating to climate change. Boards should expect the scope of scrutiny to broaden however, with more focus on what companies say about the impacts of their operations on nature and biodiversity and social and economic factors (so-called "bluewashing", after the United Nations' blue colour scheme).
Climate litigation against governments and companies continues to produce court judgments establishing novel duties to take steps to prevent climate change, and reduce emissions. In this context, courts are likely to be receptive to claims against companies which allege greenwashing, and misuse of terms like "carbon neutral".
What can Boards do to mitigate the risks?
First, prepare a risk assessment: what forms of greenwashing (and bluewashing) risk are most prominent for your company?
Second, keep up to date with developments in this space, both in terms of new regulation, but also litigation and enforcement trends.
Third, ensure that the company's processes when making sustainability statements are robust, and consistent. This includes when preparing climate transition plans, which are increasingly technical and lengthy documents.
