What greenwashing risks mean for legal and risk management professionals

15 November 2024

As sustainability issues take centre stage in corporate governance, could your company be at risk of inadvertently misleading investors or consumers? Regulators are increasing the pressure on companies to disclose climate-related risks and opportunities, while many key stakeholders are prioritising sustainability. This means companies are incentivised to make ESG-related claims to stay competitive. Yet business leaders are increasingly recognising that operating without considering, disclosing, or being asked about their impacts is nearly impossible.

As companies respond to demands for both mandatory and voluntary ESG disclosures, the risk of greenwashing grows. Regulators are stepping in to address false or exaggerated claims that misdirect investment and customer spending. Investors and customers are also initiating litigation to hold companies accountable for greenwashing. The reputational, regulatory, and litigation risks of greenwashing are higher today than ever before, posing significant challenges for legal and risk management professionals.

Allen & Gledhill Partner (Chief Economist) Elsa Chen and the Global Reporting Initiative’s Dr Allinnettes Adigue have written an article setting out best practices for legal and risk management professionals for mitigating greenwashing risks while fostering collaboration across departments. The article, first published on Medium, an online publishing platform, is the first of a series on the evolving legal and regulatory environment relating to greenwashing.

To read the article, click here.