Greenwashing occurs when companies overstate or misrepresent their environmental performance, often through marketing campaigns, product labels, or sustainability reports. It can take many forms, such as broad and unverified “eco-friendly” or “carbon neutral” claims, highlighting only positive environmental practices while omitting harmful impacts, or using vague terms like “green” or “sustainable” without measurable proof.
According to KPMG, over 60% of consumers struggle to distinguish between genuine and exaggerated claims, which makes transparency critical. Beyond misleading stakeholders, greenwashing also undermines the credibility of authentic sustainability efforts, creating confusion about which initiatives genuinely drive progress.
Why Greenwashing Remains Relevant
Several factors contribute to the continued prevalence of greenwashing:
- Rising consumer expectations – KPMG notes that 50% of UK consumers and 45% of ASEAN consumers are willing to pay a premium for sustainable products. This drives companies to highlight environmental initiatives more aggressively.
- Corporate differentiation – With sustainability becoming a competitive advantage, companies often aim to stand out, sometimes prioritising marketing over measurable impact.
- Varied standards across jurisdictions – The lack of harmonised international rules allows inconsistencies; a claim compliant in one country may be misleading in another.
- Supply chain complexity – Companies report that nearly 40% of environmental misstatements occur unintentionally, often due to difficulties verifying supplier practices in long, global supply chains.
Understanding the Risks
Greenwashing is more than a reputational issue; it carries tangible risks:
- For consumers, misleading claims can result in wasted spending on products that are less sustainable than claimed, eroding trust in the market.
- For companies, Regulators are increasing enforcement. KPMG found a 21% increase in legal and regulatory actions worldwide between 2022 and 2023. Companies may face fines, litigation, and investor scrutiny if claims are unsubstantiated.
- For society, Misrepresentation slows meaningful climate action, reduces incentives for real corporate sustainability, and may encourage “green hushing,” where companies avoid disclosure to escape scrutiny.
Global Regulatory Overview
Regulatory attention on greenwashing is intensifying.
- Singapore, Malaysia, Indonesia – Governments are introducing regional taxonomies and finance-driven disclosure rules to strengthen sustainable finance and ESG reporting. These initiatives help investors identify legitimate green projects.
- Australia – Aligning ESG reporting with ISSB standards, promoting comparability and credibility.
- Canada – The Competition Act (2024) now explicitly addresses misleading environmental claims, with penalties for non-compliance.
- United Kingdom – CMA and FCA are enforcing clearer guidance on sustainability claims, including binding actions for vague messaging.
- European Union – CSRD, Ecodesign Regulation, and the Green Claims Directive require independent verification and lifecycle-based substantiation for corporate claims.
- United States – The FTC Green Guides and evolving SEC ESG disclosure rules aim to provide transparency in corporate sustainability reporting.
Across regions, the emphasis is shifting toward measurable claims, independent verification, and disclosure aligned with investor expectations.
Enforcement & Case Studies
KPMG highlights key enforcement trends:
- European airlines – In 2024, 20 airlines were investigated for overstating the environmental benefits of “green flights.”
- UK fashion brands – CMA actions required companies to clarify sustainability statements to prevent misleading marketing.
- Global litigation – NGOs, investors, and consumers have increasingly challenged unsubstantiated green claims. Litigation globally rose 21% between 2022 and 2023, indicating heightened enforcement and scrutiny.
These examples show that regulators are now actively monitoring, auditing, and sanctioning misleading claims, creating a stronger incentive for companies to substantiate their sustainability efforts.
Financial Sector Considerations
Financial institutions are under particular scrutiny because they channel capital into sustainable investments:
- EU SFDR – Requires investors and fund managers to disclose ESG and sustainability-related information transparently.
- ASEAN taxonomies – Establish a consistent framework to categorise sustainable financial products, helping investors make informed decisions.
- Climate transition plans – Companies must demonstrate measurable reductions in emissions and alignment with global sustainability targets.
Failing to provide transparent, verifiable reporting can affect investor confidence and access to sustainable finance.
Best Practices for Companies
KPMG recommends several practical steps to reduce risk:
- Substantiate claims – Use lifecycle assessments, independent audits, and certifications to verify environmental statements.
- Integrate governance – Embed ESG oversight in corporate governance, including board-level accountability.
- Educate teams – Train employees and management on greenwashing risks and regulatory compliance.
- Monitor regulations – Keep track of evolving rules across jurisdictions, especially in ASEAN and major markets.
- Communicate clearly – Avoid vague terms. Transparency and specificity, e.g., quantifiable reductions in carbon footprint, are now expected.
Companies that follow these practices not only reduce regulatory risk but also build credibility with investors, customers, and regulators.
Greenwashing is increasingly a regulatory and financial consideration, not just a marketing concern. For companies in ASEAN and beyond, adopting transparent, verifiable sustainability practices strengthens credibility, builds stakeholder trust, and ensures contributions to measurable environmental progress.