Greenwashing

In News

• Recently, the RBI Deputy Governor stressed on the need for regulated entities to assess climate-linked financial risks along with a demand for a formal definition of green finance.

About

• What is Environmental, social, and governance (ESG)?
  • These investments are types of socially responsible investing that consider the impact on the environment, its stakeholders, and the planet in addition to the performance of the investment. 
• What is green financing? 
  • It refers to lending to environmentally sustainable economic activities.
• What is Greenwashing? 
  • Greenwashing refers to dishonest practices designed to deceive people.
  • When a firm spends more effort and money on presenting itself as environmentally friendly than on minimizing its environmental impact, this is referred to as greenwashing. 
  • It is a deceptive marketing ploy meant to deceive investors who prefer investments with a positive environmental impact and attempt to capitalize on the growing demand for environmentally sound products. 
• Need?
  • There is a need for regulated entities to develop and implement comprehensive frameworks for understanding and assessing the potential impact of climate-related financial risks in their business strategy and operations.

Source: TH