Greenwashing in the banking sector

Abstract

This thesis examines the issue of greenwashing in the banking sector, focusing on its prevalence, drivers, and implications. Greenwashing refers to the practice of conveying misleading or exagger ated claims about the environmental or social benefits of financial products and services. As sus tainability becomes a core consideration for investors and consumers, the banking sector faces growing scrutiny for such practices.

The research explores the methods by which greenwashing occurs within the banking industry, including vague sustainability claims, selective reporting, and inconsistent definitions of "green" or "sustainable" banking activities. A key concern is the gap between banks publicized green initia tives and the substantial portion of their financing directed toward environmentally harmful indus tries. The thesis also evaluates regulatory frameworks, such as the Sustainable Finance Disclosure Regulation (SFDR) and the International Financial Reporting Standards (IFRS), which aim to pro mote transparency and accountability while mitigating greenwashing risks.

Using a qualitative research approach, the study combines a literature with interviews to understand perceptions and strategies for combating greenwashing. The findings highlight the need for stricter regulations, independent auditing, and standardized reporting criteria to enhance transparency in sustainable banking. The study concludes with recommendations for policymakers, financial institutions, and stakeholders to foster genuine sustainability efforts and rebuild trust in the sector.