Financial services firms among top 10 to pay greenwashing fines

‘We expect to see more greenwashing fines in the coming years’

Banking and financial firms DWS, Goldman Sachs and BNY Mellon have been featured on a list of firms that have paid the largest corporate fines, settlements and donations over the last 10 years for greenwashing activities.

At numbers three, seven and nine respectively, the firms feature on the list due to being accused of misleading ESG funding claims. DWS was fined most at $25m for “potentially marketing ESG funds as ‘greener’ than they actually were”.

Meanwhile, Volkswagen topped the list with fines amounting to $34.7bn, largely off the back of 2014’s ‘Dieselgate’ scandal, where the company was found to have implemented software that falsified data and helped evade emissions tests on its vehicles.

The findings come from research conducted by plastic pollution prevention startup, CleanHub. Greenwashing Examples exhibits the top 10 corporate fines, settlements and donations ranging from the hundreds of thousands to the billions, showing how serious the financial implications for greenwashing have become.

CleanHub’s vice-president of marketing, Nikki Stones, said: “Given how substantial these fines are, it’s clear that regulators are trying to send a message to companies. The days of quiet punishments are over when it comes to greenwashing – brands that intentionally mislead consumers over green initiatives will be severely penalised moving forward.

“We expect to see more greenwashing fines in the coming years too, with new EU legislation on the horizon. To swerve these penalties, companies need to make sure all of their environmental claims and initiatives are transparent, truthful and are backed up with evidence.”

Increasing risk of greenwashing

ESG strategy has become a key part of modern businesses, with 98% of CEOs in a 2023 Accenture report stating that it was crucial to their roles. However, as this increases, so do cases of corporate greenwashing.

Two-thirds of US businesses admitted to greenwashing last year, which if found guilty, can have dire outcomes including large fines and negative publicity that turns customers off. Nine in 10 consumers also recently stated it’s important to them for businesses to act in a socially and environmentally responsible way.

Authorities worldwide are introducing more legislation and penalties to deal with greenwashing. At the start of 2024, the European Union adopted a new law to stop these practices. In October 2023, the US Securities and Exchange Commission imposed harsher reporting standards around ESG funds, and in November, the UK Financial Conduct Authority published it’s new general anti-greenwashing rule that requires financial firms to ensure that their labelling is fair, clear and not misleading.

This story first appeared in our sister publication, PA future.