ClientEarth, a UK-headquartered environmental law charity, and the Asia Investor Group on Climate Change, an organisation designed to raise awareness among Asia’s financial institutions about climate change, have published a guide to help tackle greenwashing.

Greenwashing and how to avoid it: an introductory guide for Asia’s finance industry provides practical information to combat greenwashing including an overview of emerging forms of greenwashing and different regulations.

“The lack of global consensus and market clarity on claims that are ‘green’ has led to an increase in greenwashing. If left unchecked, it presents long-term risks and can impede the progress in fighting climate change,” said Herry Cho, head of sustainability and sustainable finance at the SGX Group.

“In other cases, well-meaning investors have not been spared from greenwashing allegations due to a lack of market clarity on claims that are ‘green’.”

The guide provides five key recommendations to guard against greenwashing.

These are scrutinising the accuracy and credibility of green statements, being transparent about how green objectives are integrated into any financial product, ensuring a company’s green image is consistent with its internal actions, monitoring regulations in relevant jurisdictions and knowing the legal and fiduciary duties to investors and other stakeholders.

The guide pointed out that the scrutiny of greenwashing is accelerating with several regulators flagging it as a serious issue, including Yi Gang, governor of the People’s Bank of China, who is reported to have called greenwashing a “moral hazard”.

The guide also notes that a raft of new standards are being introduced globally to prevent greenwashing. While noting that Asia is at a more nascent phase, it said that Korea is leading the charge as the Ministry of Environment has reportedly launched greenwashing investigations into SK Energy and POSCO among others.