Greenwashing: Why accountants have a key role in building trust

Greenwashing is no longer a niche concern. As sustainability disclosures become more central to business strategy and stakeholder decision-making, so too does scrutiny of the claims organisations make.

Accountancy Europe’s briefing paper, Trust and Integrity: The role of Corporate Ecosystem Actors in preventing Greenwashing, may be EU-focused, but it carries important takeaways for the UK. 

Its core message is highly relevant to UK companies: preventing greenwashing is a shared responsibility across the corporate ecosystem, with CFOs, accountants and other business leaders all playing a role. As UK regulatory expectations, market pressure and stakeholder scrutiny continue to grow, accountants involved in reporting, governance and internal controls will be central to ensuring sustainability claims are accurate, evidence-based and trustworthy. 

What is greenwashing—and where does it arise? 

Greenwashing refers to deliberate or accidental claims about sustainability that are exaggerated, misleading or not properly substantiated. It can apply both to environmental matters specifically and sustainability more broadly. 

In practice, greenwashing can arise across a wide range of channels, not only in formal sustainability reports. It often appears in marketing materials, product labelling, websites, investor presentations and other communications. Common examples include vague or generic claims (such as “eco-friendly”), the use of suggestive imagery without supporting evidence, ambitious targets unsupported by credible plans, or selective disclosures that present an incomplete picture. 

This matters because greenwashing can happen anywhere in an organisation. It's not limited to one team or one type of communication — it can affect formal annual and other reporting, marketing, wider communications and business strategy. 

Why the risk is increasing 

The Accountancy Europe briefing highlights that greenwashing risk has increased as sustainability information has become more prominent in capital allocation and stakeholder decision-making. Demand for such information continues to grow, but the systems underpinning it are still evolving.  

Unlike financial reporting, sustainability reporting frameworks, data processes and internal controls are less mature. This creates a higher risk of inconsistency, overstatement or insufficient evidence. In some cases, claims may be made in good faith but without the underlying governance needed to substantiate them. 

These principles are relevant to UK companies. Key agencies in the UK involved in regulating greenwashing include: 

• Advertising Standards Authority (ASA): The ASA has Advertising Codes that include rules on environmental claims and has been active in acting against green claims in advertising found to be misleading. These actions generally result in a ban of the advert in question and negative publicity. 
• UK Government’s Competition and Markets Authority (CMA): The CMA’s guidance Making green claims: Getting it right, across the supply chain and supplemented by the  Green Claims Code helps UK enterprises comply with legal requirements about environmental claims of products and services.  
• Financial Conduct Authority (FCA): The FCA rules introduced in 2024 finalised non handbook guidance on the Anti Greenwashing Rule have yet to see any enforcement action taken, but there’s still time. 

Greenwashing risk comes with real reputational and financial risks. For example, if the CMA finds an infringement has occurred, they can apply a penalty of up to 10% of a business’ global turnover.

Preventing greenwashing 

Tackling greenwashing isn’t just a communications issue. Awareness and understanding of greenwashing risks should be embedded throughout the business. Importantly, many greenwashing risks arise from fragmented governance rather than intentional misstatement. Addressing them requires coordination across functions and clarity over roles and responsibilities. 

Accountancy Europe emphasises how the “three lines of defence” model, already used in many organisations, can be used to manage greenwashing risk: 

• 1st line of defence: A culture of integrity, ensuring sustainability disclosures are underpinned by robust systems, accurate data and verifiable evidence embedded by the CEO, CFO and executive management. 
• 2nd line of defence: Risk, compliance and internal control functions support the first line by monitoring compliance with policies and identifying vulnerabilities, ensuring consistency between sustainability disclosures and actual practices. 
• 3rd line of defence: Internal audit and the audit committee provide independent oversight and assurance on governance and control effectiveness and the reliability of sustainability disclosures. 

When working effectively this model creates an integrated system, with all functions working together to manage risks and maintain trust across every form of disclosure. 

Within this model, UK accountants, particularly those in CFO, audit and assurance roles are pivotal. CFOs are increasingly seen as the “gatekeepers” of both financial and sustainability reporting, responsible for ensuring disclosures are accurate, evidence-based and aligned with actual performance. However, accountants in other roles can help comply with greenwashing requirements. Their expertise in internal controls, evidence, assurance and professional scepticism is critical to ensuring that sustainability information meets the same standards of reliability expected of financial data. 

Building trust in sustainability claims 

Ultimately, tackling greenwashing is about maintaining trust, in individual organisations, in markets, and in the broader sustainability transition. The Accountancy Europe briefing makes clear that credible, decision-useful information depends on strong governance and coordinated action by many actors across the corporate ecosystem, including accountants.

For UK accountants, the implication is clear: accountants’ discipline and rigour long associated with areas like financial reporting can now be applied equally to sustainability claims and thereby accountants can help mitigate the risk of greenwashing. By working with other business functions, strengthening controls, challenging assumptions and ensuring transparency, accountants can play a central role in safeguarding the integrity of sustainability claims. 

At the end of the day, tackling greenwashing isn't about adding more disclosure, it’s about improving the integrity of what is being said.