Where biodiversity risks grow, greenwashing follows

# I. Introduction

Our 2025 report focuses on the strong link between biodiversity risk and greenwashing. The share of companies linked to both greenwashing risk and biodiversity risk has doubled in five years – from 3% in 2021 to 6% in 2025. ¹

Loss of biodiversity, or the variety of living organisms across the Earth’s ecosystems,² has a high price. The World Economic Forum calculates that half of global GDP depends on nature to sustain the other half.³ From clean water to crop pollination, the world economy relies on a biodiverse ecosystem.

Yet pledges made to tackle risks to the world’s ecosystem often fail to make any tangible difference. In fact, growing pressure to address biodiversity risk could be fueling a rise in greenwashing, with overstated or misleading claims distorting risk perception and capital flows. Empty pledges and ineffective box-ticking leave many sectors exposed, not only to regulatory and reputational risk, but to financial losses.

In 2025, 19% more Banking and Financial Services organizations were flagged for greenwashing risk than in the previous year. In this report, RepRisk’s latest global data⁴ reveals how biodiversity and greenwashing risks are surfacing across sectors and geographies, indicating patterns that suggest growing resilience issues for businesses. By tracking real-world incidents, our report highlights how misrepresentation can compound the financial, regulatory, and reputational consequences of biodiversity loss.⁵

# II. Greenwashing: no disguise for biodiversity risk

The growing recognition of biodiversity as a high-priority risk is intensifying demands for credible “nature-positive” strategies. Responding to this pressure, organizations may be inclined to resort to overstated, vague, or misleading claims – a classic setup for greenwashing.

Greenwashing is the practice of making unsubstantiated, untrue, or misleading claims about the environmental benefits of a company's activities to attract customers and investors. Even when well-intentioned, these claims create an operational risk if they’re not aligned with actions, and with the environmental standards they appear to support.

New RepRisk data reveals more incidents of greenwashing risk in relation to biodiversity risk. In 2021, only 1% of biodiversity risk incidents also involved greenwashing risk; 2025 data shows that share has risen to 3%.

Growth in greenwashing is even more striking when we look at individual companies, including financial institutions and other organizations. Over the past five years, the share of companies linked to biodiversity risk that were also flagged for greenwashing risk more than doubled, from 3% in 2021 to 6% in 2025. Increasingly, intentions and promises are under as much scrutiny as actions.

# Greenwashing linked to biodiversity risk has risen across both incidents and companies

Fig. 1 Share of greenwashing risk involving biodiversity risk across incidents and companies

# III. Biodiversity risk hits economic growth

Biodiversity underpins the natural systems that enable global economic activity. Healthy ecosystems regulate climate, maintain soil and water quality, pollinate crops, and provide the raw materials for industry. When biodiversity declines, the risks for businesses and investors are tangible: disrupted supply chains, rising commodity prices, and resource shortages drive socioeconomic instability, with negative impacts on markets.

The World Economic Forum ranks biodiversity loss and ecosystem collapse as the second most severe long-term threat to economic growth.⁶ No surprise, then, that biodiversity will be high on the agenda at COP 30, the 2025 UN Climate Change Conference in Brazil.⁷

Analysis of our data highlights how consistently biodiversity risk surfaces. Biodiversity accounted for 38% of environmental risk incidents recorded by RepRisk in the year ending June 2025, making it the most frequently flagged environmental issue, followed by pollution (33%), and waste (17%). Data from the past five years shows reporting of biodiversity risk incidents has been consistently high compared with other environmental issues, suggesting it’s become an endemic concern.

# Biodiversity is the most frequently flagged risk across all environmental incidents recorded by RepRisk

Fig. 2: Prevalence of environmental risk incidents over time

# IV. Regional hotspots for greenwashing and biodiversity risk

Biodiversity is a global problem with regional risk hotspots. Incidents are concentrated in a relatively small group of countries where ecological stress overlaps with complex supply chains, resource extraction, and governance challenges.

Five countries – the United States, Brazil, Italy, Indonesia, and France – account for 31% of all biodiversity-related incidents recorded. Expanding to the top ten countries, which include India, Russia, Turkey, Germany, and Spain respectively, brings that share of biodiversity risk to almost half of the global total. This underscores how biodiversity risk is global in scope but sharply clustered in certain geographies.

# The top ten countries for both biodiversity and greenwashing risk include the United States, Brazil, Italy, France and Germany

Fig. 3: Top ten countries for biodiversity and greenwashing risk incidents, 2025

The largest share of reported biodiversity risk incidents – one in every ten – occurs in the United States. This reflects the scale of the country’s industrial footprint, including extraction activities, coupled with a regulatory and legal environment that makes environmental risk incidents more likely to be detected, documented, and challenged.

Europe is another hotspot. High-risk zones for biodiversity risk include Italy, France, and Germany, where levels of monitoring and reporting are ever more likely to surface risk incidents, exposing organizations whose commitments are misaligned with actions.

Biodiversity risk is concentrated where ecological vulnerability intersects with economic activity and regulatory accountability. It’s not just a question of where the most destruction is taking place, but where stakeholder scrutiny is most focused, and likely to result in operational impacts.

# A high concentration of biodiversity and greenwashing risk can be seen in the United States and Europe

Fig. 4: Biodiversity risk and greenwashing risk by incident location, 2024-2025

Greenwashing risk hotspots follow a similar pattern to that of biodiversity, concentrating around the United States and Europe. Both the US and UK have experienced notable increases in greenwashing risk over the past year, whereas the EU’s downward trend suggests stronger compliance and enforcement measures. Five countries rank among the top ten for both biodiversity and greenwashing risk incidents: The United States, Brazil, Italy, France and Germany.

# The share of companies linked to greenwashing risk incidents has fallen in the EU but risen in the US and UK

Fig. 5: Share of companies linked to greenwashing, and greenwashing incidents, 2021-2025

Tighter regulation in Europe includes the EU Deforestation Regulation, due to take effect in December 2025.⁸ It’s designed to curb biodiversity loss by addressing deforestation and ecosystem conversion in high-risk supply chains. Companies will be required to provide verifiable, geo-referenced evidence to substantiate “deforestation free” or “sustainable” claims. Failure to comply could result in penalties of up to 4% of annual turnover.

# V. High-risk sectors and responsible investment

The number of banking, asset management, and other financial services companies linked with greenwashing risk incident reports is consistently higher than in other sectors, surpassing even high-impact sectors such as Oil & Gas.

In 2025, a total of 294 Banking and Financial Services organizations were flagged for greenwashing risk – a 19% year-on-year increase from 248 companies in the previous year (see Fig. 6). Sustainable funds, green bonds, and biodiversity-linked investment products face heightened scrutiny when promotional claims do not align with actual practices, resulting in material implications for investors and asset managers alike. Greenwashing is no longer a marginal issue in biodiversity risk, but a growing liability.

# Sectors with the highest number of companies linked to greenwashing risk

Fig. 6: The chart tracks how many companies per sector are flagged for greenwashing risk incidents over time, spotlighting the top ten sectors by total company count

The Banking and Financial Services sector may have a limited direct operational footprint when it comes to biodiversity, but it is not immune to biodiversity-related risks. The sector plays an enabling role through its financing and investment decisions. RepRisk’s longitudinal data over the past year shows that 70% of biodiversity-linked financial services companies were also flagged for Impacts on Communities, underscoring the vulnerabilities financial institutions face.

Biodiversity risks rarely exist in isolation. They cluster with other environmental and sustainability concerns, especially in high-impact sectors, such as Industrial Metals, Oil & Gas, and Chemicals. The most frequently reported issues appearing alongside biodiversity risk in these sectors include Local Pollution, Waste Issues, and Impacts on Communities.

# Issues most often flagged alongside biodiversity risk across sectors

Fig. 7: Heatmap of issues co-occurring with biodiversity risk, by sector (normalized by sector size⁹)

According to RepRisk data, between 8% and 28% of biodiversity-risk flagged companies across key sectors have simultaneously been flagged for misleading communications risk, which includes greenwashing risk. Co-occurrence of misleading communications risk and biodiversity risk has been highest in the Industrial Metals (28%) and Forestry (28%) sectors, followed by Chemicals (23%), Oil and Gas (23%), and Food & Beverage (21%).

In the Banking and Financial Services sector, RepRisk data shows that 18.7% of companies linked to biodiversity risks have also been linked to misleading communications risk incidents, adding a further layer of risk (see Fig. 7).

In Europe, regulatory actions on financial institutions for greenwashing remain prevalent, underscoring the material financial consequences of misrepresentation. In April 2025, for example, prosecutors fined a major asset manager EUR 25 million for greenwashing after it breached German investment laws.¹⁰

NGOs are globally active in drawing attention to financing for projects associated with greenwashing risk. In August 2025, a coalition of NGOs issued an open letter urging 16 banks and financial institutions to halt financing for a South Korean steelmaker's coal-based blast furnace re-lining projects. The NGO’s letter cited a mismatch between the company’s eco-friendly advertising claims and its continued reliance on coal.¹¹

Increasing demand for sustainable investment offers banks and financial institutions an opportunity to play a key role in mitigating environmental impacts. RepRisk data suggests that, currently, claims are not always consistent with action, driving reputational and stakeholder challenges for the sector.

# VI. From greenwashing to business accountability

RepRisk data reveals that greenwashing is becoming a recurring feature of business conduct. Airlines illustrate this persistence: nearly seven in ten companies in the Airlines sector flagged for greenwashing risk in 2024 were flagged again in 2025. Similar patterns are visible in the Automotive, Mining, and Technology sectors, where allegations of misleading sustainability claims continue year after year.

# Companies flagged in consecutive years for greenwashing risk

Fig. 8: Percentage of companies flagged for greenwashing risk in 2024, and again in 2025, grouped by sector

These repeat appearances may signal more than temporary lapses in communication, suggesting scope to embed greenwashing risk management into core business practices.

The sustainable fund market now represents USD 3.3 trillion AuM, according to the International Capital Market Association.¹² As investment in sustainability-focused products increases, overstated or inaccurate claims could potentially risk distorting capital allocation, mispricing underlying risks, and eroding trust in sustainable finance. Such dynamics expose both issuers and investors to heightened regulatory scrutiny and reputational consequences.¹³

In the UK, companies may be fined up to 10% of annual turnover for misleading practices, including misleading environmental claims, following the enforcement in 2025 of the Digital Markets, Competition and Consumers Act.¹⁴

Other jurisdictions are opting for non-binding guidance. In Canada, for example, the Competition Bureau recently released final guidelines on environmental claims, aiming to help businesses comply with the 2025 Competition Act’s anti-greenwashing provisions. These include claims related to biodiversity, habitat restoration, and “nature positive” commitments.¹⁵

Regulatory approaches are diverging and, while the past five years have seen companies rush to brand themselves as “nature positive,” “climate neutral,” “biodiversity friendly,” or “regenerative,” it’s clear that words – and even compliance – are not enough for some investors: in September 2025, Dutch pension fund manager PGGM terminated mandates worth a total of EUR 19.5bn, citing sustainability strategy.¹⁶

Meanwhile, asset managers following strategies aligned with institutional investors’ demands for stewardship are reaping the reward, with Amundi and Invesco winning mandates with People’s Partnership earlier in the year.¹⁷

Ultimately, companies that compound their biodiversity risks by greenwashing not only endanger ecosystems but also their own long-term viability, making rigorous monitoring and accountability an urgent business imperative. Stakeholders – investors, regulators, and consumers – are increasingly demanding that corporate actions match corporate commitments. Embedding business conduct risk data into decision-making helps organizations to position themselves for long-term success and safeguard the biodiversity that underpins economic resilience.

---

Copyright 2025 RepRisk AG. All rights reserved. RepRisk AG owns all intellectual property rights to this report. This information herein is given in summary form and RepRisk AG and/or the third party contributors to this report make no representation or warranty that any data or information supplied to or by it or them is complete or free from errors, omissions, or defects. Without limiting the foregoing, in no event shall RepRisk AG and/or the third party contributors to this report have any liability (whether in negligence or otherwise) to any person in connection with the information contained herein. Any reference to or distribution of this report must include a link to the content to provide sufficient context. The information provided in this presentation does not constitute an offer or quote for our services or a recommendation regarding any investment or other business decision, and is not intended to constitute or to be used as a substitute for legal, tax, accounting, or other professional advice. Please note that the information may have become outdated since its publication. Should you wish to obtain a quote for our services, please contact us.