Greenwashing : The Combat Continues With a Deal With Companies Across the E.U
In London, on June 21st, The European Union regulators, worried about greenwashing, have decided to take some measures against companies who are accused of practicing it.
They have reached a deal concerning new rules for sustainability reporting of large companies starting in 2024. Greenwashing has become a well-established phenomenon, particularly among multinational corporations, which claim to be environmentally friendly while promoting false claims and activities to improve their reputation.
"This aims to end greenwashing and lay the groundwork for sustainability reporting standards at the global level."
These decisions concern companies with over 250 staff and a turnover of 40 million euros ($42.13 million). From now on, they will have to report environmental, social, and governance (ESG) risks and opportunities as well as a full report of their carbon footprint and the impact of their activities on people as well. Smaller listed companies will not be spared; starting in 2028, they will have to present a report as well, only lighter and with fewer constraints.
"From now on, having a clean human rights record will be just as important as having a clean balance sheet," said Pascal Durand, who led negotiations for parliament.
All disclosures, to avoid any type of bias, would be externally audited by specialized companies and "not just leave it in the hands of... the Big Four," according to Durand. By defining the reality of what a "green" investment is and making sure that those who claim to be "green" are honest about reducing their impact on the external environment. The goal of ESG disclosures for asset managers is also to make the transition to a climate-neutral economy easier by starting with one of the biggest players in the economy.
The EU countries and parliament must vote formally to confirm the agreement reached on Tuesday. The EU is expected to take the lead in establishing global sustainability disclosure requirements, according to the committee.