Greenwashing dos and don’ts

  • Legal update

    25 August 2023

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The regulatory focus on claims relating to environmental, social or governance (ESG) factors is increasing, along with litigation questioning the legitimacy of such claims. Entities that do not exercise caution when it comes to ESG claims are at risk now, more than ever, of garnering unwanted attention and penalties.

We have been watching the progress of this emerging trend, and have developed the following information sheet.

Who needs to read it? 

Those who are involved in writing, reviewing, or signing off on public statements, marketing materials, or reporting by an organisation should be turning their mind to whether the publication contains any ESG claims, and whether they expose the organisation to risk. This information sheet is designed for financial service providers and climate reporting entities but will be relevant to other businesses too.

What does it cover?

The FMA’s Executive Director of Response and Enforcement defined greenwashing as “misleading or false claims about social or environmental benefits or impact”. The FMA considers that this issue goes to the heart of fair dealing under Part 2 of the Financial Markets Conduct Act 2013, and that the overall impression provided by marketing materials is critical. For non-financial services businesses, the same concerns arise under the Fair Trading Act 1986 which is overseen by the Commerce Commission. 

The consumer (and sometimes regulator) expectations that ESG information is disclosed is still relatively new, and it is a real challenge for organisations to gauge at what point a claim becomes potentially problematic, and what factors could cause a claim to be particularly risky.

In the information sheet here, we have provided examples that illustrate both what risky ESG claims, and more considered ones, look like. The information sheet is not intended to provide a comprehensive analysis or legal guidance, instead it is intended to illustrate what the red and green flags are when it comes to an ESG claim, and the expected standard of such claims. 

Key questions that should be asked are:

  • Has this claim been substantiated before it is made? 
  • Is it achievable? 
  • Do we have a plan to achieve it, if it is not achieved already? 
  • Is there a risk this claim overstates what we are doing, or achieving?
  • Is it vague to the point of containing no substantive claim or commitment?
  • Is it comprehensible to the intended reader?

See the following for our other publications on greenwashing: 


This article was co-authored by Elise Plunket, a Solicitor in our Banking and Financial Services team.