As ESG considerations become embedded in corporate strategy and investor priorities, the legal risks associated with greenwashing are escalating. Once an abstract marketing concern for many firms, greenwashing, defined as ‘behaviour or activities that make people believe that a company is doing more to protect the environment than it really is’ [1], has become a primary target not only for marketers but also for regulators and litigators alike. Firms that can translate regulatory scrutiny into proactive, commercially attuned advice are best positioned to gain the confidence of clients navigating heightened ESG expectations and reputational risk.
In recent months, enforcement activity has intensified across major jurisdictions, with regulators asserting unprecedented authority to crack down on misleading sustainability statements. In the UK, the Financial Conduct Authority (FCA) has confirmed its anti-greenwashing guidance, effective from May 2024 [2]. These rules restrict the use of terms such as ‘sustainable’, ‘green’, or ‘ESG’ unless firms can robustly substantiate those claims. The FCA is also implementing a mandatory labelling regime for investment products, aimed at providing clarity in a space long plagued by ambiguous branding.
Australia has taken a notably aggressive stance, with the Australian Securities and Investments Commission (ASIC) levying a record AU$10.5 million fine against superannuation fund Active Super in early 2024 [2]. The fund had been promoting exclusion policies around fossil fuels and gambling that, ASIC later demonstrated, were not actually being implemented. This case, now widely studied in compliance circles, evidenced that superficial green branding without operational reality invites severe consequences.
Meanwhile, the European Union is reinforcing its commitment to regulatory integrity. In June 2024, the three European Supervisory Authorities – EBA, ESMA, and EIOPA – issued a joint statement calling for heightened supervision of sustainability-related claims across financial services [3]. The objective is to harmonise enforcement and increase scrutiny of how ESG commitments are communicated to markets.
France, for its part, offers a compelling model of regulatory assertiveness that other Francophone jurisdictions may soon emulate. The 2021 Loi Climat et Résilience established a robust framework for controlling environmental advertising. Companies in France are now prohibited from making carbon neutrality claims unless they disclose clear methodologies, offsetting strategies, and impact timelines [4]. This was not just regulatory theatre: in mid-2024, the Autorité des Marchés Financiers (AMF) reached a settlement with asset manager Primonial Reim, citing failures to align promotional sustainability narratives with actual investment policy [5].
Meanwhile, environmental NGO Notre Affaire à Tous has targeted corporate behemoths such as TotalEnergies, alleging that their branding misleads the public about their genuine contributions to the energy transition. The lawsuit, filed under France’s 2017 Duty of Vigilance Law, initially faced procedural hurdles but was revived by the Paris Court of Appeal in June 2024. The court ruled that the claimants had satisfied formal requirements, opening the door for what could become a landmark trial on climate-related corporate accountability [6][7].
The rise in greenwashing cases is having a significant impact on law firms, as these matters span advisory, transactional, and dispute resolution practices. Corporate clients are increasingly seeking legal counsel, not only to defend against enforcement actions, but also to audit and refine their internal ESG frameworks proactively [3]. Questions that were once the responsibility of marketing teams, such as ‘can we claim our products are sustainable?’ or ‘is our environmental impact statement substantiated?’ are now being directed to legal departments under mounting pressure.
Furthermore, the international aspect of ESG investments necessitates legal expertise from both local and global perspectives. A company’s environmental claims made in one jurisdiction may soon need to comply with multiple regulatory frameworks, such as the EU SFDR regulations and the UK’s anti-greenwashing rules [4]. In this complex environment, leaders who can position their firms as thought leaders in ESG compliance, transactional, and litigation spaces will be best placed to win institutional mandates.
Greenwashing, once dismissed as a branding faux pas, has now entered the enforcement spotlight. For law firm leaders, this presents both a risk and an opportunity. Those who act now to deepen their ESG regulatory and litigation offerings will not only serve their clients better; they’ll future-proof their practices in a world where sustainability claims must be real, robust, and regulator-ready.
For more information, please contact Megan Sturdy, at megan@fidessearch.com.
References:
[1] Cambridge Dictionary, Greenwashing Definition. https://dictionary.cambridge.org/dictionary/english/greenwashing
[2] The Australian, ASIC fines Active Super $10.5m for ESG greenwashing, February 2024. https://www.theaustralian.com.au
[3] European Supervisory Authorities (EBA, ESMA, EIOPA), Joint Statement on Sustainability-Related Claims, June 2024. https://www.eiopa.europa.eu
[4] Taylor Wessing, The French Regulatory Arsenal Against Greenwashing, 2023. https://www.taylorwessing.com/en/interface/2023/greenwashing/the-french-regulatory-arsenal-against-greenwashing
[5] Reclaim Finance, A Step Towards Sanctioning Greenwashing in France, July 2024. https://reclaimfinance.org/site/en/2024/07/08/a-step-towards-sanctioning-greenwashing-practices-in-france
[6] Le Monde, La cour d’appel de Paris ouvre la voie à un procès climatique inédit contre TotalEnergies, June 2024. https://www.lemonde.fr
[7] Climate Case Chart, Notre Affaire à Tous and Others v. Total, Updated 2024. https://climatecasechart.com/non-us-case/notre-affaire-a-tous-and-others-v-total/
