A group of environmental, social and governance (ESG) sector experts have issued a report aimed at tackling EU companies that “greenwash.”
The report, Joint Response to ESA Call for Evidence on Greenwashing, puts forward five key recommendations for the European Supervisory Authorities “ESA” to consider, along with the wider EU apparatus.
The key recommendations are:
- Increase funding for the monitoring framework that investigates and identifies potential greenwashing practices.
- Ensure the soon-to-be developed ESG Rating regulations consider greenwashing.
- Adopt a more punitive regulatory regime for greenwashing offences.
- Increase investment in informational campaigns from regulators.
- Commission a feasibility study regarding the potential of stand-alone greenwashing legislation.
The team that produced the report consists of ESG lawyer Paul Watchman, who led the 2005 UN initiative which devised a legal framework for ESG investing, and former UNEP FI head Paul Clements-Hunt, who oversaw the creation of the PRI and who Aston University says is credited with coining the ESG acronym.
The group also includes Aston Law School’s Dr Daniel Cash and Ben McQuhae, founder of the boutique Hong Kong law firm that Watchman joined last year, McQuhae’s company, Clements-Hunt’s advisory firm The Blended Capital Group and Dr Cash’s The Credit Ratings Research Initiative, sponsored the filing.
Greenwashing is a real and pervasive threat to the credibility of modern business practice.
Commenting on the report, Dr Daniel Cash, a senior lecturer in law at Aston Law School and founder of the Credit Rating Research Initiative, said: “It was such a privilege to work with the dream team of Paul Watchman, Paul Clements-Hunt and Ben McQuhae to put together the report.
“Greenwashing is a real and pervasive threat to the credibility of modern business practice. The consequence of not instilling order into the ever-developing relationship between business and sustainability could be dire.
“We have therefore called on the European Supervisory Agencies to act, pre-emptively, to instil order and develop a progressive practice that can solidify the EU’s position as a global leader in this space.”
