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FTSE chiefs: greenwashing claims increasingly a major risk as investor pressure swells

Greenwashing was one of the main topics at the recent COP conferences, which took place in Scotland and Egypt in 2021 and 2022. Photo: cop26

More than half of FTSE 350 board directors are very concerned and 45% are quite concerned that growing regulatory scrutiny on companies regarding greenwashing pose a potential risk to their organisations, according to new research shared with ESG Insight today.

In fact, nearly all (97%) of respondents expect the level of pressure from retail/institutional investors over the progress of their ESG strategy to increase expect the level of pressure from retail/institutional investors over the next three years, the research commissioned by carbon offset platform Kana Earth found.

“There is growing demand from investors and regulators for companies to be clear and transparent in their climate-related reporting,” explained Andy Creak, CEO and co-founder, Kana Earth.

Creak pointed out that forty-seven percent say scrutiny will increase substantially, while half say there will be a slight increase.

Respondents expect investor pressure to take a variety of forms with the majority (69%) expecting to see more shareholder votes against directors’ reappointment/appointment.

Pay under threat

More than two-fifths (44%) say investors will vote against remuneration packages if they are dissatisfied with ESG progress; 30% say there will be an increase in resolutions to enhance ESG strategy/reporting; 2% say investors will want to see links between remuneration and ESG enhancements.

While respondents showed a high level of confidence in their company’s ESG strategy – 46% rated theirs very favourably and 50% rated it favourably – there were concerns among FTSE350 directors about the challenge of complying with new regulations on climate change and environmental issues.

Forty-four percent of respondents say regulatory compliance “is one of their biggest challenges”, half say it is a major challenge and just 5% say it is a challenge, but they have the resources to meet it.

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