This report highlights the various forms of greenwashing practices, i.e. exaggeration, minimisation, vagueness, irrelevance and outright fabrication, that impact investors and the environment. The report defines greenwashing as providing misleading information about products, services or companies that convey an environmentally friendly image that is not supported by their business practices.

Greenwashing is an ethical and governance issue as it violates the principles of transparency, integrity and accountability, and misleads stakeholders including customers and shareholders. Greenwashing, if not addressed, will undermine sustainable development, exacerbate environmental problems and decrease trust in corporations. The report advises that governance professionals have a critical role in managing greenwashing risks in their organisation.

Australia’s increase in regulation and legislation on greenwashing practices reflects its priority for addressing greenwashing practices. The report highlights the Australian Securities and Investments Commission’s (ASIC) role as the regulator of corporate entities and obligations under Australian Consumer Law, specifically the Corporations Act and the ASIC Act. ASIC published Information Sheet 271 to provide guidance on avoiding greenwashing when offering or promoting sustainability-related products.

This report advises governance professionals to manage greenwashing risks by firstly, implementing policies and processes for making accurate and truthful environmental claims across all publicly-facing communications. Secondly, by using accredited ESG reporting frameworks such as Global Reporting Initiative, UN Principles for Responsible Investment, IFRS S1, and UN Sustainable Development Goals to provide transparent, standardised, comparable and complete ESG reporting. Finally, by having a proactive engagement between boards, shareholders and other stakeholders to reduce the chances of greenwashing practices.