Environment Agency chair warns greenwashing companies pose risk to investors
Companies that believe their own greenwash are embedding liability, storing up risk for their investors.
That’s according to Emma Howard Boyd, chair of the UK’s Environment Agency and interim chair of the independent, commercially minded Green Finance Institute, speaking at the UK Centre for Greening Finance and Investment Annual Forum at the Institution of Civil Engineers in London today.
Investor interest in ESG practices widens the scrutiny of companies’ environmental performance and provides a growing financial incentive for innovation ‘but, as the market for environmental benefits crosses an inflection point, it is exploitable,’ Howard Boyd added.
She said environmental regulation must work in lockstep with financial regulation to ensure incentives and penalties have enough clout to drive change.
‘If we fail to identify and address greenwashing, we allow ourselves false confidence that we are already addressing the causes and treating the symptoms of the climate crisis,’ she said. ‘Greenwash makes it more likely that we won’t realize this deception until it is too late. Companies that believe their own greenwash are embedding liability, storing up risk for their investors.’
‘Future lies in adaptation standards’
Howard Boyd said NGOs like ShareAction, Make My Money Matter and ClientEarth must be applauded for their work to call out greenwashing.
‘And the government’s work on a green taxonomy begins to address this,’ she added. ‘Providing frameworks and legislation for sustainable disclosure allows everyone to compare like for like – and make informed choices. The more businesses are transparent about their plans to transition to net-zero and prepare for climate shocks, the easier it is to benchmark best practice, set standards and celebrate the companies that really are delivering on their commitments.’
Howard Boyd said she believes the future lies in ‘some form of adaptation standards, adding. ‘in finance, the importance of disclosure and data cannot be underestimated. Now, we need to use disclosure and data as a launchpad for deals and delivery.’