GlobalData analysts claim that governments, this year, will crack down on greenwashing as stricter implementations of the Paris Agreement are likely.

Greenwashing issues continue to occur because different companies are able to vary their individual goals and methods of reporting their footprint. According to GlobalData’s thematic research, “government scrutiny over greenwashing and regulation around ESG disclosure will increase in 2023. Businesses that do not change misleading environmental claims or prioritise delivering on ESG pledges will face increasingly severe fines..”

The EU introduced the European Green Deal (EGD) in September 2022, ahead of the first re-evaluation of the Paris agreement in 2023.

However, government edicts such as new ESG frameworks, Scope 3, the EGD and the Science Based Targets initiative are expected to steamroll significant changes in greenwashing.

GlobalData finds that: “regulators are taking an increasing interest in monitoring Scope 3 emissions. The US, EU and New Zealand recently proposed a mandatory requirement for listed companies to begin disclosing their Scope 3 emissions.

Further improvements in standardised methodology between sectors and supply chain partnerships will be essential in 2023 for businesses to become accountable and to continue their commitment to net zero by 2025.”

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As well as this government crack down, there will also now be pressure coming from social media and the public as the EU’s Digital Service Act, passed in May 2022, sets out new obligations for social media platforms.

In 2023, companies will be required to disclose data regarding digital climate misinformation to the public, including mitigation efforts.

Michelle You, co-founder and CEO of Supercritical says: “The climate emergency can no longer rely on flawed and underhanded practices.

Business leaders must start investing in solutions that actually remove carbon from the atmosphere, prioritising a portfolio approach to their sustainability goals – this is the only viable route to net zero.”

GlobalData is the parent company of Verdict and its sister publications.