Greenwashing: What Accountants and Finance Teams Need to Know

Greenwashing — misleading claims about the environmental credentials of products, services or organisations — has become an important issue, and accountants and finance teams have a relevant role to play in relation to it. As attention to environmental and sustainability claims grows, so does the importance of accuracy and integrity in this area. This guide explains what greenwashing is, why it matters, and the relevance to accountants and finance teams. For related material, see our guides on ESG and professional ethics.

What is greenwashing?

Greenwashing broadly refers to misleading or unsubstantiated claims about the environmental credentials of a product, service, or organisation — creating a false or exaggerated impression of how environmentally friendly or sustainable something is. It can take various forms, from overstated or vague environmental claims to selective disclosure that paints a misleadingly positive picture. Greenwashing matters because it can mislead consumers, investors and others who increasingly care about environmental and sustainability matters, and because it undermines trust. As interest in environmental and sustainability issues has grown, so has scrutiny of the claims organisations make — and so has concern about greenwashing. There is increasing attention from regulators, stakeholders and others on ensuring that environmental claims and disclosures are accurate and substantiated. Understanding what greenwashing is — and why it's a problem — is increasingly relevant in business and finance.

Why greenwashing matters

Greenwashing matters for several reasons. It can mislead consumers, investors and other stakeholders who are making decisions partly on the basis of environmental considerations. It undermines trust — in the organisations involved and potentially more broadly in environmental claims. It carries reputational and potentially regulatory risk for organisations that make misleading claims, as scrutiny in this area increases. And it can distort the very efforts to encourage genuinely sustainable practices, by allowing misleading claims to compete with genuine ones. As environmental and sustainability matters become more prominent — including in financial reporting and disclosure — the accuracy and integrity of related claims becomes more important. This growing focus means greenwashing is increasingly on the agenda for businesses, regulators and stakeholders, and is an area where care, accuracy and integrity matter a great deal.

The relevance to accountants and finance teams

Accountants and finance teams have a relevant role in relation to greenwashing, for several reasons. As environmental and sustainability information increasingly features in reporting and disclosure — an area where finance professionals are often involved — the accuracy and integrity of that information matters, and finance professionals can help support it. The profession's strong grounding in accuracy, integrity, evidence and rigour is directly relevant to ensuring claims and disclosures are substantiated rather than misleading. Finance professionals are well-placed to bring discipline and scrutiny to environmental information, just as they do to financial information. And as sustainability reporting develops, finance teams may increasingly be involved in producing or assuring related disclosures, making the integrity of this information part of their remit. In short, the values and skills of the finance profession — accuracy, evidence, integrity — are highly relevant to guarding against greenwashing and supporting trustworthy environmental claims and disclosures.

How accountants can help guard against greenwashing

There are several ways accountants and finance teams can contribute to guarding against greenwashing. They can apply their characteristic rigour and evidence-focus to environmental information, helping ensure claims are substantiated. They can support accurate, honest reporting and disclosure of environmental and sustainability matters. They can bring professional scepticism to claims, just as they would to financial information. They can help develop good processes and controls around environmental information. And they can stay informed about developments in this evolving area, including emerging reporting requirements and expectations. By bringing the discipline, integrity and scrutiny that characterise the profession to environmental information, accountants and finance teams can play a genuinely valuable role in supporting trustworthy claims and guarding against greenwashing. As this area continues to develop, keeping informed — including through CPD — helps finance professionals contribute effectively. Always check current requirements and guidance, as expectations in this area are developing.

Frequently asked questions

What is greenwashing?

Misleading or unsubstantiated claims about the environmental credentials of a product, service or organisation — creating a false or exaggerated impression of how environmentally friendly or sustainable something is.

Why does greenwashing matter?

It can mislead consumers and investors, undermine trust, carry reputational and regulatory risk, and distort efforts to encourage genuinely sustainable practices — with scrutiny increasing.

Why is it relevant to accountants?

Because environmental information increasingly features in reporting and disclosure, and the profession's grounding in accuracy, evidence and integrity is directly relevant to ensuring claims are substantiated rather than misleading.

How can accountants help?

By applying rigour and an evidence-focus to environmental information, supporting accurate reporting, bringing professional scepticism, helping develop good processes, and staying informed about developments.

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