Greenwashing and ESG Risks: Communication and Concrete Actions

Sustainability as a Competitive Lever… or Legal Risk?

In the world of corporate sustainability, words matter. More and more companies are choosing to communicate their environmental commitment to attract consumers and investors. However, when these promises are not backed by concrete actions, they risk engaging in so-called greenwashing - the practice of presenting themselves as sustainable without actually being so. This often leads to an overstatement of positive impacts and - at the same time – an understatement or complete omission of negative ones, as seen in cases of greenhushing.

This dynamic is not merely a reputational issue. Today, greenwashing represents a real legal and competitive risk, with severe consequences for misleading communication. The European Union has initiated a crackdown through new directives and regulations, while national authorities have already sanctioned several high-profile cases.

What Is (and isn’t) Greenwashing?

The term greenwashing is a blend of "green" and "whitewashing", referring to the strategic use of environmental messaging that is unverified, vague, or misleading.

The new European regulatory framework – particularly Directive 2024/825/EU – defines a green claim as: “Any message, text-based or visual, that states or suggests a positive, neutral, or improved impact on the environment.”

Greenwashing differs from greenhushing, the opposite trend where companies avoid communicating their ESG progress for fear of being accused of greenwashing.

The GLS Case: When Stated Sustainability Collides with Reality

A recent and concrete example of greenwashing is the GLS case, where the Italian Competition Authority (AGCM) imposed an €8 million fine.

Key violations included:

Ambiguous environmental claims: confusion between “emission reduction” and “offsetting.”
Lack of verification: no objective data or certification to support advertising claims.
Non-transparent mechanisms: the “Climate Protect” contribution was applied automatically, without explicit consent.
Profit margins: the funds collected exceeded actual offset costs by a factor of four – generating profit instead of covering environmental costs.
No credible decarbonization plan: no targets, timelines, or verifiable reports.

The GLS case illustrates how weak ESG data governance can expose even active companies to sanction risks, especially when transparency and traceability are lacking.

The Evolving Regulatory Landscape in Europe

Companies must now navigate a dense regulatory environment, including:

Directive 2024/825/EU – Greenwashing
Upcoming “Green Claims” Directive
CSRD (2022/2464) – Corporate Sustainability Reporting Directive
CSDDD (2024/1760) – Corporate Sustainability Due Diligence Directive
SFDR, EU Taxonomy, and Consumer Code provisions (Articles 20–22)

The new rules prohibit:

Environmental claims about future outcomes without evidence, plans, or independent verification;
Generic or irrelevant claims;
Environmental statements about an entire product without specification;
Use of environmental labels not recognized by public authorities.

How to Avoid Greenwashing: 5 Key Defenses for Businesses

Terminological Clarity
Define terms like “zero emissions,” “carbon neutral,” and “sustainable” precisely-avoid ambiguity.
Data Verifiability
All claims must be documented, measurable, and verifiable - favor objective metrics, audits, and independent assurance.
Transparent and Concrete Plans
Environmental strategies must be structured, with timelines, dedicated resources, and ongoing monitoring.
Stakeholder Engagement
Sustainable communication must be two-way: dialogue with customers, suppliers, communities, and investors is essential.
ESG Data Governance
Map data sources, assign responsibility, validate and trace information. Effective ESG Data Governance is the only way to prevent disputes and maintain trust.

Sustainability is Credibility

Today, companies are judged not only by what they do, but also by how they talk about it. In a market where trust is everything, clear and honest communication is crucial to avoid accusations, sanctions, and reputational crises.
Greenwashing is the opposite of sustainability. And sustainability, to be real, must be grounded in truth, verification, and value.