Greenwashing and sustainability reporting risks
Greenwashing is when an organisation makes false or misleading statements about sustainability information. Green spotlighting/dazzling is where an organisation highlights one very positive aspect of its sustainability practices or impacts, hoping to detract from less positive issues. For example, individuals might rationalise deliberate greenwashing if providing certain disclosures or meeting particular environmental targets would result in the provision of finance to the organisation, or positive publicity leading to enhancement of income streams. Those responsible for preparing sustainability information in an organisation might be consciously or subconsciously influenced to greenwash.
The risk is elevated if people receive an element of their remuneration in the form of a bonus that is linked to sustainability information being reported. You can see that this concept is very similar to that of creative accounting, where financial information is manipulated to serve the needs of the preparer of the information, rather than for the needs of the users of that information. All of this means that providing assurance on sustainability information can be quite The risk of greenwashing is elevated if people’s remuneration is linked to sustainability information being reported.
SUSTAINABILITY ASSURANCE | GREENWASHING AND SUSTAINABILITY REPORTING RISKS
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