This post was revised and edited on 1st July 2025.
In April 2025, the German investment management company DWS was fined US$27 million for lying to its customers that it was a “leader” in environmental, social and governance investing [1].
Volkswagen has faced numerous fines and legal fees worldwide after installing software in its cars to falsify greenhouse gas emissions making customers (and regulators) think that Volkswagen cars were ‘greener’ than, in reality, they actually were [2].
DWS and Volkswagen are not the only ones ‘greenwashing’.
An assessment of 723 equity funds worth US$330 billion specifically marketed using climate-related key words found that over half (421) would increase global warming above agreements contained in the 2015 Paris Agreement [3].
Greenwashing is essentially claims of performance and achievement that turn out to be untrue. In global health, this situation is not new. The sector has plenty experience with overinflated claims [4].
But we still want to be sure that a donor, or a company, or a charity, or a project, or a product, or a service is ‘genuine’: genuinely green and clean that supports all life on our beautiful Earth and our healthy place within it.
Let’s start with a definition.
The Six Sins of Greenwashing
Greenwashing is a broad term the connects overlapping ideas but tends to cover a range [5] of ‘sins’.
Below I use the word company for short, but the term covers commercial as well as social enterprises, charities, foundations, governments, as well as governmental organizations and international non-governmental organizations. All these companies-of-humans have engaged in greenwashing.
The word, greenwashing, invokes deception whether intentional or not, with the aim of creating a false narrative that a company’s actions, products or services are more ecologically friendly that in fact they are.
This deception can take the form of:
- Selective disclosure about a company’s environmental or social performance;
- Diverting attention away from a company’s destructive actions by making vague statements about being green;
- Decoupling company strategy from actual change that would lead to genuine achievement;
- Deceptive manipulation deliberately and systematically imply that a company’s activities and services are ecologically clean. DW and Volkswagen (see earlier) engaged in this type of greenwashing;
- Dubious authorisation and label such as eco-labels, or even misleading claims could also be embedded in law [7].
- Membership without action. For instance, signing up to the Paris Agreement or becoming a member of Science Based Targets Initiative or the Glasgow Climate Pact does not, by itself, mean that a country or a government or a company are making change.
Greenwashing is said to be costly [5,6,7]. These costs include detrimental long-term costs such as
- Regulatory fines (e.g., Volkswagen, DW); legal costs arising from legal disputes; and increased public relations costs to manage reputation damage;
- Share price volatility for public listed companies because investor confidence has been lost. Investors may sell shares, potentially destabilizing the company’s financial position;
- Loss of sales and increased costs of sales due to reduction of customer trust and therefore, consumer retention. It costs more money to find new customers that to hold-on to existing customers;
- Human and ecological costs over the long term.
But if greenwashing is so costly, why is it prevalent?
Greenwashers are Human Too
A company, a commercial or social enterprise, a charity, a foundation, a government, or a non-governmental organisation, can benefit from engaging in greenwashing.
What are these benefits?
Over the short term, a company can maximise income because its modus-operandi doesn’t change. This means that the company doesn’t have to spend money on changing… anything. It can avoid the costs of say, sourcing different raw materials, changing manufacturing processes or transportation methods; it doesn’t lose or gain staffing or have to create and run new training programmes; and it doesn’t aggravate or lose shareholders by reducing its dividends in the short term. The financial, physical, mental, and emotional resources that people need to deal with change are avoided.
At the same time as a company decides to avoid change, it can make claims about undertaking change in its communications. Communications like annual reports, its website, press releases, social media and so on as well as PR activities to create an impression that a company is ‘going green’. It’s worth noting that these communication and PR efforts at presenting a false narrative represent resource investment by the company – they aren’t free.
But what puzzles me is why make the false claim?
One explanation is that greenwashing costs are significantly less – the financial cost of communications and PR is relatively smaller in terms of time and other resources than real change.
But that still doesn’t explain the act of wasting money in making false claims when a company could simply not bother in the first place. A company could NOT make false claims and still continue in its merry way; NOT raise expectations and NOT divert any money into the work of public relations and communications.
So why make a false claim?
Because when people make claims about going green, it does something in the world.
Greenwashing is proactive. It’s not passive. A company engages in greenwashing to maintain a status-quo.
I think the status-quo is belonging and power because pressures for greener finance create risks of exclusion and loss.
Humans are social. It’s trite but true. I think that an ultimate benefit of greenwashing is that it serves a human need for belonging.
Like other highly social primates, humans have engaged in deception since our origins living in small, highly intimate groups. When you deceive me, you gain a competitive advantage even if there are plenty resources around. At the same time, I respond to your deception by increasing cooperation with others in the group. Deception and cooperation evolved together: skill in one enables skill in the other [8].
When we humans lived in small intimate groups, competing and collaborating with each other, our survival necessitated staying together. Many animals and birds are social. But the human difference is that “human beings have a pervasive drive to form and maintain at least a minimum quantity of lasting, positive, and significant interpersonal relationships” [9] and we commit a huge amount of brainpower, time, and energy pursing a sense of belonging.
Included in our human commitment to belong, is the work of using our overly large brains to imagine what others think about us and how we can influence them to make sure that we stay included. We try to increase belonging by trying to be liked, by ‘showing-off’ our achievements or how much we conform to the group, by exchanging social capital like acknowledgement, recognition, cooperation, as well as important physical resources [10] like energy, food, land, forests and so on.
However, despite our best efforts to ensure belonging, rejection happens to everyone at some point. And the agony of social rejection is physically painful so that humans resist and actively seek to avoid, the loss of existing relationships with other humans.
What’s this got to with greenwashing?
Greenwashing is a human endeavour. Consider the various sins of greenwashing in the light of need-to-belong:
- ‘Showing off’ by using symbols of inclusion (eco labels);
- Trying to be liked by claiming what has been done and hiding what hasn’t been done (selective disclosure; deliberate manipulation);
- Efforts to get into a group (membership without action).
When situated within the journey of human evolution, the usual economic argument that deception (greenwashing) enables control of symbolic and financial capital by actively diverting attention from inequitable practices that result in ecological destruction still holds.
But that’s not the whole story. At work, is also fundamental human behaviour to find and maintain belonging.
The Stories We Tell
Greenwashing is not only about belonging – it’s also about maintaining power.
Greenwashing diverts attention from the way the status quo preserves access to resources for a minority of humans.
There are many ways that Attention Diversion maintains a status quo. I’ll focus here on two activities that appear ‘normal’ in climate finance at present.
First, is the dominant narrative repeated across the media that an incredibly large volume of funds is needed to make a transition from the economies and health systems that we have now, to a way of working and living that is clean, pollution negative, biodiversity positive and resilient to the consequences of a warming world.
I have previously argued that the story of volume underpins the creation of yet more debt.
More finance at high volumes can intensify the processes of “extraction and value concentration” [11] that have caused the ecological crisis in the first place.
Economies and health systems of most countries are largely composed of small companies and organisations that don’t need a sheer volume of money. They have limited capacity to absorb funds at that scale. Large investors seek, and have capacity to manage, a massive amount of funds. This includes institutional impact investors.
The narrative of volume is diverting attention away from how the international financial architecture embeds market-rate-returns for a small group and prevents reform to support a majority of companies (including charities, social enterprises, as well as government departments, governmental organisations, and some non-governmental organisations) to be less extractive, and redistribute economic and social value.
Techniques of Transparency
When I deceive you, and you find out, something has changed in our relationship. You are far more wary, less likely to trust, and less likely to believe my attempts to deceive you in the future. Greenwashing generates uncertainty.
In response to this uncertainty, there has been a visible rise in sustainability standards that claim to create transparency and generate trust with the ultimate aim to prove that climate finance is clean as claimed. For instance,
- International Financial Reporting Standards;
- Climate-related Financial Disclosures;
- ISO 10464 family of standards;
- LuxFlag, a responsible investment label.
The idea is that standards create a level playing field, compatibility, and transparency by listing investment criteria publicly so that auditors and verifiers can be engaged in different locations to check that a company, or a product, service, process meets standard. The intention of these standards is to respond to deception: an attempt to make actions more transparent.
The proliferation of standards though, has also created confusion. There are lots of them and the different standards try to achieve different aims. All appear to be monopolised by professionals claiming expertise (in legal, economic, scientific, technical matters). Expertise is a way to create barriers to entry, barriers to understanding, and barriers to public scrutiny [11].
There is much discussion about who is conducting and using sustainability standards, how to develop the ‘right’ set of assurance standards and regulations, and whether sustainability assurance has an effect on company performance [12].
But less talked about is that for audits to ‘work’ – to create transparency and trust that is claimed – apriori trust is needed. Trust in the method of an audit, in the technology used, in the people involved. All of these can be tinkered with in order to influence the result.
And while standards are hoped-to-be globally applicable, context matters.
For a sustainability audit to be able to generate transparency and accountability, many other factors are at play such as:
- Local environmental laws and regulations exist that specifically prevent fraudulent claims;
- These regulations are implemented and have sufficient resourcing to be enforced;
- The legal and regulatory system hasn’t been captured by powerful vested interests which can eliminate legal disputes and silence negative press in the first place;
- Internal company leadership was ineffective [6].
And for standards and results to be made known, there is a need for communication freedom of some kind implicating:
- Press, media, advocacy as well as audit organisations of some kind actually exist;
- There is some kind of freedom for the media;
- Audit organisations are legally allowed to operate within the country;
- Companies don’t respond to these threats with counter action to intimidate/block potential for legal or any other action.
And so,
I started this post wondering if there is a way that you and I couldn’t be duped by green finance claims, regardless of who is making them. Can there be an end to Greenwashing?
I think there are 3 possibilities:
- The creation of a false narrative is dropped so that companies continue on their merry way regardless of ecological and health consequences. I think this is happening under Trump’s Drill-Baby-Drill policy of 2025 because a group leader has enabled belonging without the need for deception.
- Another way could be that the global financial architecture gets continually greenER…increasingly values greater impactful ecological outcomes so that greenwashing in a sense gets evolved-out of the system. This wouldn’t happen because of any one approach – there would be no silver bullet (e.g., sustainability audits) – rather the financial architecture as a complex system evolves.
- Last is a way that I can’t see, or can’t imagine, because I am limited in my knowledge and perspectives, just as you are, or any of our local, national, and international leaders.
But even if greenwashing were to end, I don’t think that deception will cease to be part of the human experience – because its part of BELONGING. Turning our efforts to increase belonging may have the greatest impact of all.
REFERENCES
[1] Reuters (2025) Deutsche Bank-Owned Asset Manager DWS Fined $27 Million For Greenwashing https://www.reuters.com/sustainability/german-asset-manager-dws-fined-25-mln-eur-greenwashing-case-2025-04-02/#:~:text=FRANKFURT%2C%20April%202%20(Reuters),environmental%20and%20social%20investing%20credentials
[2] BBC News Volkswagen: The Scandal Explained https://www.bbc.co.uk/news/business-34324772
[3] Influence Map (2021) Climate Funds: Are They Paris Aligned? https://influencemap.org/report/Climate-Funds-Are-They-Paris-Aligned-3eb83347267949847084306dae01c7b0
[4] Pai (2019) Archives of Failures in Global Health https://communities.springernature.com/posts/archives-of-failures-in-global-health
[5] Yang et al (2020) Greenwashing Behaviours: Causes, Taxonomy And Consequences Based On A Systematic Literature Review Journal of Business Economics and Management https://doi.org/10.3846/jbem.2020.13225
[6] Liang Y and Gao X (2025) Greenwashing And Financial Performance In Public Health Firms: The Mechanism Of Organizational Legitimacy Erosion Frontiers in Public Health https://doi.org/10.3389/fpubh.2025.1565703
[7] Nemes et al (2022) An Integrated Framework to Assess Greenwashing Sustainability https://doi.org/10.3390/ su14084431
[8] Hall et al (2017) Cooperation and Deception in Primates Infant Behaviour and Development https://doi.org/10.1016/j.infbeh.2016.11.007
[9] Baumeister et al (1995). The Need To Belong: Desire For Interpersonal Attachments As A Fundamental Human Motivation Psychological Bulletin https://doi.org/10.1037/0033-2909.117.3.497
[10] Leary et al (2022) The Relentless Pursuit Of Acceptance And Belonging Advances in Motivation Science https://doi.org/10.1016/bs.adms.2021.12.001
[11] Newell et al (2025) The Contested IPE of Green Finance Competition & Change https://doi.org/10.1177/10245294251318468
[12] Free et al (2024) Greenwashing And Sustainability Assurance: A Review And Call For Future Research Journal of Accounting Literature http://doi.org/10.1108/JAL-11-2023-0201