In February, the European Securities and Markets Authority (ESMA) outlined its desire to define greenwashing in its sustainable finance road map. And the Securities and Exchange Commission’s (SEC) Gary Gensler signaled the regulator’s intention to clamp down on greenwashing.

The UK is fighting back against greenwashing as well. In March, United Nations Secretary-General Antonio Guterres announced a panel to determine whether companies’ initiatives to curb climate change are legitimate or could be classified as greenwashing. More brands are glomming onto the trend, with some focusing more on verbiage rather than behind-the-scenes practices.

As the EU and other governments look to implement more stringent sustainability requirements for the fashion industry, retailers can use these programs to show compliance and head off greenwashing criticisms. The drawbacks: Many of these initiatives are reliant on suppliers providing information on a textile’s source and sustainability.

Greenwashing was a concern for many Gen Z consumers worldwide, per a June 2021 Deloitte survey. During the pandemic many brands and retailers in the UK made spurious claims about how they “were there for you,” and were “helping to make the world a better place.” But consumers are savvy and will not swallow hollow marketing-speak without seeing real evidence of any sustainability claims.

Meanwhile, greenwashing claims aren't limited to brands and retailers. The Advertising Standards Authority (ASA) in the UK has accused HSBC of greenwashing its reputation for environmental consciousness. The ASA is targeting two ads run by HSBC placed at bus stops in Bristol and London in October 2021.

The big takeaway: Banks’ inaction in cutting fossil fuel financing is disappointing, especially considering reputational damage done by previous “greenwashing” incidents. The Ukraine war is exacerbating a looming energy crisis and worryingly high demand may support more short-term fossil fuel production.

Allegations of greenwashing threaten to derail the rapid growth of ESG investing strategies, but AI-powered fintech data solutions have the power to allay fears.

Environmental, social, and governance (ESG) will be a major trend during 2022, but charges of greenwashing pervade the investment world—and regulators like the SEC are concerned ESG funds might mislead investors. B2Bs help large corporations meet new environmental regulations, targets, and disclosure requirements. They also ensure asset managers’ portfolios are actually green.

The absence of a common global benchmark that sets out which companies should qualify for ESG-labeled funds is a leading cause of greenwashing. Investment firms rely on third-party ratings agencies that use different standards to score companies—which leads to inconsistencies across portfolios.

This increases the risk of greenwashing, which could cause investor confidence to plummet, diverting away capital from critical sustainable projects. Fintechs can give investment managers analytical capabilities that help them to screen companies against various benchmarks, identify common factors, and develop their own ratings.

Risk: Greenwashing Backlash. Tandem has touted itself as the “Good Green Bank” since its 2020 acquisition of sustainability-focused lender Allium. Despite featuring “green” products like a new savings account and loans for eco-friendly home upgrades, Tandem hasn’t explained what makes it eco-focused or supplied environmental credentials.

Of course, there is a huge issue of greenwashing—big businesses that are doing it maliciously and smaller businesses that don't know enough about their product’s manufacturing process. Competition is amazing in this space. At the beginning, we couldn't even find a fulfillment center that would guarantee not to use plastic tape.

It’s time to talk about greenwashing (12/2). Few stories in 2021 were big enough to unseat the pandemic as the biggest global concern—but wildfires, floods, hurricanes, and tornadoes brought the environmental crisis to top of mind throughout the year. Companies are trying to clean up their acts, and clear standards can help them get it done.

Reaching this cohort digitally is obviously important, but greenwashing and societally insincere campaigns will be swiftly sniffed out and judged. So, while it’s important to tout such credentials, a brand needs to be prepared to prove them, as illustrated by the following campaign. Sample brand/campaign: Lush. The cosmetics brand launched its bold “Anti-Social” campaign in November 2021.

Consumers, investors, and employees want to see tangible differences—not greenwashing merely for optics. What’s the Demand for Sustainability? Sustainability is becoming a core imperative for businesses. Numerous technologies have the potential to help consumers shop more sustainably by providing information and improving companies’ efficiencies. But do consumers care?

Concerns over greenwashing will require due diligence in identifying ESG data providers who follow transparent methodologies. Streamlined consent management—necessary for collecting or sharing various types of personal information between financial institutions—is still evolving. Laws are under review in the UK and being drafted in the US and Canada.

Some 89% said companies should be “braver” in doing so, but 67% said communicating about sustainability raised the risk of greenwashing. That danger is all too real, according to a June 2021 report from The Changing Markets Foundation.

Environmental, social, and governance (ESG) strategies have emerged as a strong growth vector for investment managers and will be a major trend during 2022, but charges of greenwashing pervade the investment world—and the SEC is concerned that ESG funds might mislead investors.

In response to allegations of rampant greenwashing, the EU widened its ESG regulatory regime, mandating that corporations disclose nonfinancial ESG performance metrics and making financial market participants disclose sustainability metrics like greenhouse gas emissions.

Yet allegations of greenwashing are plaguing ESG investing. FIs like Aspiration that provide transparency and can assure consumers that their investments are indeed in sustainable companies have been rewarded with user growth. Differentiated offering. Aspiration’s green mission also helps it stand out in the crowded US neobank market.

This can help mitigate greenwashing seen with index investing, where investors leave it to asset managers’ arbitrary views on what constitutes green stocks. Tax optimization. Investors can offset capital gains taxes from winning stocks by selling the individual losing stocks, also known as “tax-loss harvesting.”.