Greenwashing is on the rise again and shifting notably towards companies that are critical to net-zero investors, exposing assets to severe risk of regulatory and reputational damage.
The latest data shows that the total number of incidents in which companies overstated their sustainability achievements or failed to keep to their pledges surged 28% in the year to 31 July, according to new research from RepRisk. That’s the second consecutive year of increases after reports dropped in 2024, the data company said in its fifth annual Greenwashing Report.
The most significant increase was seen within the Alternative Energy, Industrial Metals, Mining, Software and Computer Services, and Utilities category, whose companies are most closely linked to the energy transition, providing the materials for renewable energy infrastructure, electric vehicles and artificial intelligence processing. Together, their share of greenwashing risk incidents rose from 18% in 2022 to 29% in 2026.With RepRisk research showing that Oil and Gas’s share of greenwashing risk incidents fell from 17% in 2022 to 12% in 2026, Global Head of Market Development and Spokesperson Alexandra Mihailescu Cichon said the focus had shifted as transition-linked investments gained importance. Investor allocations into transition industries climbed 8% to US$2.3 trillion in 2025, according to BloombergNEF data.
“Scrutiny follows the capital,” Mihailescu Cichon told Data Management Insight. “A few years ago, the banks and the asset managers were exposed to greenwashing because they were making net zero pledges but continued to fund the oil majors. Now it’s shifted towards the transition because money is moving towards mining, metals, renewables, AI and so on.”
Key Metric
Sustainability risk has become a key metric among investors as they seek to avoid allocations to assets that may fall foul of regulations or face damage from the impacts of climate change, such as ever-more severe weather events. Greenwashing is factored among those risks because complaints can lead to large regulatory fines and reputational damage that might impact the company’s value to investors.
RepRisk’s latest Greenwashing Report showed that greenwashing is increasing not only in volume but also in severity. The proportion of complaints in the last year that registered the highest levels of severity – measured by an incident’s impact on health and safety, the number of people affected by it and how it was caused – was the highest on record.
“If you look at the five years we’ve been doing this research, it used to be that one in six incidents were very severe, whereas now it’s a quarter,” Mihailescu Cichon said.
“There’s so much money going into it so quickly that it’s hard for investors to foresee or substantiate every single claim – and to stay on top of it.”
Future Claims
One illustrative case comes from Australia, where a gas distributor promised that the gas supplied to homes on its network would become renewable within a generation. Australia’s competition regulator challenged the claim in Federal Court, alleging that it lacked reasonable grounds given the technical and economic barriers to supplying renewable gas at scale.Mihailescu Cichon said forward-looking claims can create greenwashing risk when companies benefit from environmental promises without showing how they will deliver them. “A future transition claim needs a credible route from today’s infrastructure to the promised outcome,” she said.
Another key finding of the latest report is that biodiversity has overtaken climate as the environmental issue most frequently linked to greenwashing. Between 2022 and 2026, such complaints nearly doubled to 300, compared with those concerning climate change and emissions, which rose very slightly to 275 from 272.
Another illustrative case involves a lithium producer that presented its operations as part of the clean-energy transition. Communities and campaigners challenged that narrative over alleged impacts on water, mine waste, and neighbouring communities, underscoring the distinction between a mineral’s role in the transition and the way it is extracted.
“It’s a very different story today than when we produced our first greenwashing report,” said Mihailescu Cichon.
Growing awareness of biodiversity issues has led to closer examination of corporate actions.
“Where there are more pledges and more claims, there’s more scrutiny. And that can then lead to the increase in greenwashing risks,” she said.
Financial Greenwashing
The financial sector remains the biggest source of greenwashing risk, seeing a 40% year-on-year increase among financial services providers and a 23% jump among banks. Together they account for a fifth of all incidents of greenwashing, whether they be linked to their own activities or those of the companies in which they invest.
That the total number of greenwashing incidents rose for a second year after a decline is concerning, said Mihailescu Cichon, who added that remedies could be found in better data provisioning.
Only independent and accurate information can give the necessary levels of transparency into companies’ activities that can offer investors early warning signs of potentially damaging greenwashing incidents.
“Data from outside companies that examines business conduct can be an antidote to greenwashing by enabling investors to ask, ‘How are companies actually conducting their business?’” Mihailescu Cichon said.
“The expectation is that companies can stand behind the claims that they’re making.”
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