Chloé Asconi-Feldman

Introduction 

Although the term has been thrown around in recent years as a new buzzword, greenwashing was coined in the 1980s and has prevailed since the 1960s.¹ Yet, it is finally due to the Climate Crisis and the ongoing trends of implementing ‘green’ laws, that companies that are guilty of greenwashing are finally being held accountable. Although each country has their own set of standards regarding regulating corporate practices and sustainability, this article will focus mostly on Ireland and the EU. Since many sets of regulations that Ireland follows regarding sustainability are from the EU, it is critical to assess where Ireland stands compared to other countries in the Union, and what this means for the future of corporations in Ireland. 

Greenwashing in an EU Context 

Considered to have one of the most ambitious decarbonisation plans of any country in the world, many companies find Ireland an attractive country to expand and invest in. Yet recent studies have shown that the majority of Irish firms do not meet EU requirements regarding sustainable investments. With few regulations regarding greenwashing until recent years, a survey of 125 financial service firms in Ireland found that fewer than one-third of the companies were fully complying with EU rules around ‘green investments’. In the context of the entire EU, a 2021 report found that around half of the companies audited by the EU were found to have been engaging in greenwashing. Where countries in the EU rank in terms of environmental claims, Ireland does not seem to be paving the way. Countries such as France have seen the most success, implementing seemingly radical laws which could place parties who are found guilty of greenwashing to face prison sentences. France’s Climate and Resilience Law which came into effect in 2021 sets out clear definitions of language relating to the Climate Crisis and enforces strict requirements. In terms of the green bond market, despite its growth, Ireland’s is relatively

small at €28.8bn in October 2022, whereas other EU member states such as the Netherlands reported a green bond market share of €91.5bn. ² 

Sustainable Finance Disclosure Regulation 

The Sustainable Finance Disclosure Regulation (SFDR) was introduced by the European Commission and holds the aim of making it easier for investors to learn about a fund’s environmental, social and governance (ESG) credentials.³ The Financial Services Commissioner Mairead McGuinness considered the SFDR as the first regulation to set rules on how financial market participants must disclose sustainability-related information.⁴ Since it is considered the first set of standards, the requirements pose a challenge to the industry and regulators, having the Compliance Institute, a Dublin-based body for regulatory and compliance professionals, state that there is still significant unease around the SFDR.⁵It has caused hundreds of funds to downgrade their ranking in terms of sustainability, notably from having an Article 9 ranking, which are funds that have sustainable investment as their objective, to an Article 8 ranking, which are funds that promote environmental or social characteristics.⁶ 

New EU Laws 

In 2024, there has already been improvement in the EU, with Parliament approving new directives that will combat greenwashing, setting higher standards to improve product labelling and banning the use of misleading environmental claims.⁷ Regulating sustainability labels will mean that corporations will have to go through an official certification scheme by public authorities in order to use labels such as “environmentally friendly” or “climate neutral”. ⁸ Alongside this, there will be a ban on claiming that a product has a neutral, reduced or positive impact on the environment due to emissions offsetting schemes.⁹ What this means for Irish companies is the need to emphasise clarity in their advertising, and remove false claims. It also enforces a standard of transparency that is not currently present within Irish companies. A global study conducted by PwC found that the majority of investors in Irish companies believed that reports regarding sustainability performances tend to contain unsupported claims and contain greenwashing.¹⁰ 

Green Growth in Ireland 

With the increasing level of importance that the EU has been placing on sustainability and greenwashing, Irish boards of directors have started prioritising potential greenwashing risks and

determining how to eliminate these risks. The Central Bank of Ireland claimed that ESG was one of their main regulatory priorities in 2023, emphasising the country’s quick reaction to the SFDR. Considering the Irish government’s Climate Action Plan aims to halve their national emissions by 2030 and achieve net zero emissions by 2050, many firms are stating that investing sustainably is not only important to comply with the new regulations, but also in order to achieve these national goals.¹¹ The Big Four have all published articles relating to the importance of ESG investing in Ireland, as well as many other firms alike. It seems that despite its past in greenwashing and false environmental claims, there is genuine concern for green growth among companies. Dublin has recently hosted sustainability-oriented events such as the Sustainable Aviation Fuel and Carbon Finance Day, which is one of the largest meeting places for participants in the aviation industry.¹² Philip Lee, an Irish law firm, has recently advised different organisations on one of the world’s first Article 6 projects, which is a project that is able to transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate targets.¹³ This example shows initiatives from Irish firms to take on roles where there is green growth and step out of the greenwashing stereotypes that companies and firms once held. 

Conclusion 

Irish companies need to address climate and sustainability issues authentically for several reasons. According to numerous surveys, investors want to know companies’ sustainability strategies and can guarantee that the information provided is reliable.¹⁴ Social influence, the EU’s

new regulations, and investors’ needs are all reasons why Irish companies need to prioritise green growth if they want to prosper in the future. So far, Ireland seems to be moving in a positive direction, yet since we are in the early days of this new legislation, it is difficult to come to a fair conclusion. Yet one conclusion that we can make is that the days of greenwashing practices are coming to an end in Ireland, for the better.