The number of financial institutions flagged for greenwashing climbed substantially in the past year, highlighting both the vulnerability of individual firms and the need to integrate greenwashing risk management into decision-making processes..
The sector remained the worst offender for overstating their progress or making vague or misleading claims, the report by sustainability risk data company RepRisk found. Greenwashing among banks and other financial institutions increased to 294 in 2025 from 72 over the past year, representing a 19 per cent increase.The fourth annual edition of the company’s study also found there had been a sharp rise in the number of greenwashing incidents that were also linked to biodiversity risks, with such incidents almost tripling over the past five years.
While the findings indicate that institutions are increasingly recognising the exposure they have to nature-linked risk, they also highlight the ongoing challenge of effectively communicating their progress. Alexandra Mihailescu Cichon, chief commercial officer at RepRisk said they are layering new risks said that as scrutiny increases, claims that were once acceptable – such as a simple ‘eco-friendly’ statement – no longer hold up.
“Scrutiny has intensified. Last year’s dip was driven by greenhushing and regulatory pressure – both of which persist. Yet despite these forces, greenwashing is on the rise again,” Mihailescu Cichon told Data Management Insight.
Incidents Tripled
The report found that 6 per cent of all companies linked to greenwashing incidents were also linked to biodiversity risks in 2025 – up from 3 per cent in 2021 and following a dip last year. Biodiversity risks are the risks that are most frequently flagged across environmental incidents recorded by RepRisk, the report stated, ahead of local pollution and waste issues.
More broadly, the total number of greenwashing incidents linked to biodiversity risks across all industries tripled and the number of companies flagged doubled.
The report stated that a robust approach to risk management was needed.
“Companies that compound their biodiversity risks by greenwashing not only endanger ecosystems but also their own long-term viability, making rigorous monitoring and accountability an urgent business imperative,” it stated.
“Stakeholders – investors, regulators, and consumers – are increasingly demanding that corporate actions match corporate commitments. Embedding business conduct risk data into decision-making helps organisations to position themselves for long-term success and safeguard the biodiversity that underpins economic resilience.”
Enabling Role
Mihailescu Cichon said it was unsurprising that financial institutions should top the list because they have “an enabling role through financing and investment decisions”.
However, some financial firms were more directly implicated in greenwashing. “One of the challenges that we see around greenwashing it’s that it’s persistent because it’s complex and because expectations have changed,” Mihailescu Cichon said. “They morph and evolve over time, from investors, from regulators, from stakeholders, and at the same time of those changing expectations, the scrutiny has grown.
“So just very simply, what was once acceptable – say, a simple eco-friendly claim – may no longer hold up.”
Nevertheless, the persistent presence of some companies in the annual report “may signal more than temporary lapses in communication” that would require the inclusion of greenwashing risk management into their core business operations. Financial institutions were low on the list of sectors with the most repeat offenders. Airlines, automobile parts manufacturers and software and computer services were at the top.
Western Bias
The highest concentrations of greenwashing and biodiversity risks were found in the US and Europe, with the US accounting for the single-largest share of miscommunication (15.7 per cent) for nature-linked risks (11 per cent). Nevertheless, the number of companies linked to greenwashing risks has dropped in the European Union while they have climbed in the US and UK.
Mihailescu Cichon said the fallout from greenwashing can be severe, with financial firms’ reputations at risk if they are found to have misrepresented their performance.
“There are still high-profile cases that we come across. Those are the ones that get a lot of attention, and certainly those are the ones that most companies want to avoid,” she said. “It’s not just a fine, it’s not just a financial hit, it’s a major reputational hit that they don’t want vis a vis their investors.”
Biodiversity risk has risen up the ESG agenda even as some major governments have sought to roll back sustainable finance initiatives. Investors are keen to ensure that the securities they back will not be harmed by the increasing prevalence and severity of nature-related risks such as storms, floods and water supply issues. Neither do they want to be seen providing finance to assets that have a negative impact on their surroundings.
“Biodiversity is a top-of-mind issue for our clients and it’s top of mind for global stakeholders as we head towards COP30 in a few weeks,” she said, referring to the next iteration of the United Nations’ climate change conference, which will be held in Belém, Brazil, next month.
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