ESG: Environment – Social – Governance

Greenwashing & Prevention

The fight against human-induced climate change is one of the most pressing issues facing policy makers and society at large. Businesses increasingly recognise the responsibility they bear and are taking a variety of measures to both help overcome the climate crisis and operate more sustainably.

However, litigation against greenwashing – where companies attempt to establish a “green” image by making environmental claims and sustainability commitments without verifiably taking some or any of the action promised – is also on the rise.

Greenwashing can have serious consequences for companies. Alongside civil liability, companies risk warning letters and lawsuits under unfair competition law, in particular for making misleading commercial statements or not meeting information obligations. Criminal and regulatory sanctions are also possible. What’s more, mere accusations of greenwashing can significantly damage a company’s reputation.

Given the significance of this issue, various legislative initiatives have been launched at German, European and international level to increase transparency requirements for companies by introducing additional reporting and communication obligations and to enforce stricter rules for substantiating green advertising claims. As some of the rules are industry-specific and others more cross-sectoral in nature, businesses need to critically assess to what extent these rules apply to them. Any company can potentially face greenwashing accusations, making ESG greenwashing one of the most important compliance issues today.

Given the key importance of this topic in society and politics, regulation will only increase along with the risk of having to deal with ESG litigation.

We advise clients on minimising risks – helping them avoid greenwashing and implement appropriate ESG compliance systems as well as defending against liability claims, sanctions or other adverse effects.

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