Does the issue of "greenwashing" still exist in the financial services sector?

As ESG concepts evolve and regulatory scrutiny intensifies, financial institutions are reimagining the meaning of sustainability for the future of finance. Many institutions are currently exploring how the industry can transition from "greenwashing" and "covering up green" to a new era of "green protection," integrating sustainability into governance, strategy, and risk frameworks to enhance resilience and long-term value creation.

First, while "greenwashing" remains a concern for financial institutions, many are now addressing it more proactively. Interest in the term "greenwashing" has declined in recent years—online searches for "greenwashing" peaked in late 2021 but have since fallen to about a quarter of that level. This likely reflects increased familiarity with the concept and the impact of stricter regulations, global sustainability goals, and new transparency requirements, making it more difficult for companies to exaggerate or misrepresent their environmental progress.

Second, with increased scrutiny from shareholders, regulators, and the public, financial services companies are becoming more cautious in communicating their sustainability initiatives and have strengthened internal and external processes. Coupled with growing political backlash in some countries regarding the conflict between ESG and non-financial agendas and fiduciary responsibilities, this has created a sense that, while practices may not change much, companies are talking less, or even deliberately avoiding, discussions about progress on issues such as decarbonization.

Furthermore, while public rhetoric may have diminished, financial institutions are continuing to focus on sustainability, particularly at the board level. According to EY's latest "European Financial Services Board Watch Report," financial companies are actually appointing board members with sustainability expertise at the fastest pace in three years. The study found that in the year ending June 2025, 33% of board members had some form of sustainability experience, up from 23% the previous year. Currently, 93% of boards of European banks, insurance companies, and asset management companies have at least one director with sustainability expertise, up from 82% in June 2024.

Moreover, financial companies are increasingly recognizing that environmental and social factors are not abstract ideals, but real business risks and opportunities, and sustainability is increasingly being integrated into risk management, investment decisions, and long-term strategies. In other words, companies may not talk about sustainability as much as before, but they are taking more decisive action on sustainability. New regulations and reporting standards are gradually permeating daily business practices. This is prompting financial institutions to integrate sustainability into their compliance and risk management frameworks. These changes make sustainability a structural component of business operations, rather than an optional one. During UN Climate Week, Simon Steele, Executive Secretary of the UN Framework Convention on Climate Change, emphasized how environmental, social, and governance processes can be more closely integrated with the "real economy." This further confirms that sustainability is no longer a secondary issue, but rather at the core of business operations.

Currently, after experiencing the two extremes of "greenwashing" (exaggerating progress) and "downplaying progress" (underestimating progress), financial companies are now moving towards a new middle ground. I like to call it "green protection," which represents this new middle ground. It is not about managing public perception, but about integrating the concept of sustainability into the core of business decisions. Companies are "green-protecting" their assets, investments, and valuations to address the risks and opportunities brought by sustainability and ensure long-term resilience. "Green protection" is not about superficiality or propaganda strategies, but about substantive impact.

Overall, this era of "green" signifies a more pragmatic and down-to-earth approach to sustainability. After years of oscillating between over-promising and under-reporting, businesses are finding a more trustworthy foothold. For financial institutions, the question is no longer whether to speak out or remain silent, but rather whether to continue moving forward with their business.