Written by Leela Julong
16 June 2025
As businesses worldwide embrace sustainability, the term "greenwashing" has become a growing concern. Companies that exaggerate or misrepresent their environmental, social, and governance (ESG) efforts are facing increasing scrutiny from regulators, investors, and consumers. In 2025, the crackdown on misleading ESG claims is stronger than ever, with lawsuits and regulatory actions reshaping corporate accountability.
The Greenwashing Crackdown: Key Developments
Recent data reveals that over 2,700 ESG-related lawsuits have been filed globally as of early 2025, more than doubling since 2020. These lawsuits target misleading sustainability claims, climate-related liability, and supply chain violations. Regulatory bodies such as the U.S. Securities and Exchange Commission (SEC), the European Union, and Canada have intensified their efforts to combat greenwashing.
In Europe, the upcoming Green Claims Directive will require companies to substantiate their sustainability statements through independent verification. Meanwhile, Canada’s Bill C-59 now allows private parties to challenge misleading ESG advertising in court.
Major Greenwashing Cases (2024-2025)
Several high-profile cases have underscored the growing risks of greenwashing, as regulators and consumers demand greater transparency in corporate sustainability claims.
(a) Procter & Gamble (P&G) – Charmin Toilet Paper Lawsuit
P&G faced a class-action lawsuit over its Charmin toilet paper, accused of misleading consumers about its environmental impact. The lawsuit alleges that P&G sources most of its wood pulp from Canada’s boreal forest, a critical ecosystem, through harmful logging practices such as clear-cutting and burning. Despite marketing claims like “Keep Forests as Forests” and “Protect-Grow-Restore”, plaintiffs argue that P&G’s sustainability efforts fail to mitigate the destruction of primary forests. The lawsuit also challenges the use of third-party sustainability logos, claiming they mislead consumers into believing Charmin is more eco-friendly than it actually is.
(b) ASOS, Boohoo, and Asda – CMA Greenwashing Investigation
In 2024, The UK’s Competition and Markets Authority (CMA) launched an investigation into ASOS, Boohoo, and Asda over concerns that their eco-friendly fashion collections were misleading consumers. The probe found that brands used vague and unsubstantiated claims, such as labelling products as “sustainable” or “eco-friendly” without clear criteria. The CMA secured formal agreements from these companies, requiring them to ensure green claims are accurate, transparent, and backed by evidence. The investigation highlights the fashion industry’s struggle with greenwashing, as consumers increasingly demand genuine sustainability efforts.
On the 18 September 2024: CMA have published a compliance guide to help fashion businesses stay on the right side of consumer law when making environmental claims. The guide draws from the conclusions of this investigation and builds on the principles of the Green Claims Code.
(c) 918 European Companies Linked to Greenwashing Incidents
In 2024, 918 European companies were identified in greenwashing risk incidents, marking a significant increase from 338 cases in 2020. The oil and gas, food and beverage, and banking sectors were particularly affected. The rise in cases reflects stricter regulations and growing litigation against misleading ESG claims. The EU’s upcoming Green Claims Directive aims to curb deceptive sustainability advertising by requiring independent verification of corporate environmental statements.
The Hidden Costs of Greenwashing for Organizations
Greenwashing—where companies mislead consumers about their environmental efforts—can have serious consequences beyond just bad press. As sustainability becomes a business imperative, organizations caught in deceptive ESG claims face financial, legal, and reputational risks. Here’s how greenwashing can negatively impact businesses:
1. Eroding Consumer Trust
Customers today are savvier than ever when it comes to sustainability. If a company is exposed for exaggerating its green credentials, it risks losing consumer confidence. Once trust is broken, loyal customers may turn to competitors with more credible sustainability efforts.
2. Legal and Regulatory Penalties
Governments and watchdog agencies are tightening regulations around ESG claims. Companies found guilty of misleading environmental advertising can face hefty fines, lawsuits, and regulatory scrutiny. The EU’s Green Claims Directive and U.S. SEC regulations are setting stricter standards for corporate sustainability disclosures.
3. Tarnished Brand Reputation
A greenwashing scandal can damage a brand’s credibility, making it difficult to rebuild trust. Negative media coverage and social media backlash can amplify the harm, discouraging investors and business partners from engaging with the company.
4. Missed Opportunities for Genuine Sustainability
Instead of investing in real environmental initiatives, companies that engage in greenwashing focus on marketing gimmicks. This not only hinders innovation but also prevents businesses from making meaningful contributions to sustainability. Companies that fail to adopt authentic ESG practices risk falling behind competitors who prioritize genuine environmental stewardship.
5. Disillusioned Stakeholders
Beyond customers, investors, employees, and business partners may lose faith in a company that engages in greenwashing. If stakeholders perceive a business as insincere or lacking integrity, they may withdraw support, leading to financial and operational challenges.
To avoid these risks, organizations must prioritize transparency, accountability, and genuine sustainability efforts.
How Businesses Can Avoid Greenwashing
To maintain credibility and avoid legal risks, companies must:
✅ Ensure sustainability claims are backed by verifiable data
✅ Avoid vague terms like "eco-friendly" without clear substantiation
✅ Disclose Scope 3 emissions and carbon offset effectiveness
✅ Implement third-party audits for ESG reporting
Looking Ahead
With stricter regulations and heightened consumer awareness, greenwashing is no longer just a reputational risk—it’s a legal and financial liability. Companies must prioritize transparency and accountability to thrive in this new era of ESG scrutiny.