A review in the International Journal of Managerial and Financial Accounting on the subject of greenwashing in financial services has found that financial institutions often claim environmental responsibility while continuing to finance high-carbon projects.
The study examined peer-reviewed publications over a ten-year period and identified a gap between the sustainability claims of financial institutions and their actual environmental performance. It found that selective reporting and misleading disclosures - part of the process of so-called greenwashing - can help institutions satisfy investor and regulatory expectations without actually changing their financing activities.
Two dominant themes were identified in the review: regulatory pressures and corporate governance, and carbon performance measurement and the integration of environmental, social and governance (ESG) criteria into financial decisions. Given that banks and investment managers influence the funding of economic activities, if there is widespread greenwashing, then it might be assumed that those activities are not leading us towards a more sustainable future, after all. Misleading claims risk directing investment towards activities that undermine emissions reduction efforts and weaken confidence in sustainable finance.
There needs to be put in place standardised environmental performance measures and independent verification of sustainability disclosures to reduce the amount of greenwashing taking place.
Sahu, M., Uddin, F., Jee, K., Shekhar, S. and Hossain, M.B. (2026) ‘Greenwashing practices in carbon management accounting within the financial services sector: a systematic review using PRISMA and bibliometric analysis’, Int. J. Managerial and Financial Accounting, Vol. 18, No. 10, pp.1–30.
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