Greenwashing May Be The Next Legal Challenge For Businesses

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In early August, the U.S. Securities and Exchange Commission sent document requests and subpoenas to fund managers seeking information on their environmental, social, and governance marketing.

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01 Sep 2023

In early August, the U.S. Securities and Exchange Commission sent document requests and subpoenas to fund managers seeking information on their environmental, social, and governance marketing. While final intent of the investigations is unclear, it points to a potential crackdown on greenwashing.

Greenwashing is a term coined by environmental activists to describe when companies exaggerate their environmentally friendly actions. Traditionally, this was done through marketing. The proverbial donating $10,000 to a charity, then spending $100,000 on marketing telling everyone you donated $10,000. When the customer base wanted environmentally friendly companies, companies benefited by making themselves appear greener.

For decades, the action just frustrated environmental activists who wanted actual change by companies. However, as environmental, social, and