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Climate Series 3: Litigation cases for greenwashing are costing companies up to 10% of annual revenue – and Malaysia is a greenwashing hotspot
Green Claims – Building Brand Value and Trust via Effective Messaging
Recent media reports1 indicate a troubling trend: Malaysia is experiencing a rise in greenwashing cases, surpassing those in nearby countries like Singapore and Brunei. Greenwashing refers to misleading marketing tactics where companies falsely portray their products or services as sustainable or eco-friendly. These cases can involve outright deception, such as fake certifications, but also ambiguous use of language and imagery, like using nature visuals without any genuine environmental efforts.
What does this mean for companies?
As consumers become more conscious of their environmental impact, scrutiny on companies is increasing, with global legislation2 addressing misleading green claims. While Malaysia lacks specific regulations on false green claims, companies are still influenced by the regulations of trade partners (e.g., EU, USA, China and Japan).
Companies face three main risks in this context:
- Financial risk: In some regions, violations of green claims can lead to fines of up to 10% of annual revenue3.
- Reputational risk: Discoveries of greenwashing can damage a company’s reputation, pushing clients and consumers away.
- Greenhushing risk: Heightened scrutiny may cause companies to hesitate in openly sharing their sustainability efforts, which means they will miss out on benefits to brand value, consumer trust, and investment opportunities.
Making green claims with confidence
Evidence-based green claims allow companies to highlight their sustainability efforts and enhance brand value. To confidently make these claims, consider three key aspects:
- Building the case: Understand your current sustainability actions and results. How are you communicating them? Can you support any claims with tangible evidence?
- Understanding the context: Be aware of global legislation aimed at preventing greenwashing. Are regulations emerging that might affect you?
- Covering all bases: Be mindful of potential residual liability risks. Does your D&O policy adequately protect against claims that may arise against your company?
1 Changemakr.Asia, More Greenwashing Cases in Malaysia, Outpacing Singapore and Brunei-Data Shows
2 MorningStar, Global Greenwashing Regulations: How the World Is Cracking Down on Misleading Sustainability Claims
3 Simmons & Simmons, UK watchdog's greenwashing rulings show ongoing scrutiny of eco claims
As the world’s largest independent insurance broker, Howden helps organisations build resilience against climate risk.
Our Climate Risk & Resilience (CRR) offering brings climate analytics, advisory, and insurance solutions together—enabling businesses to anticipate climate impacts, meet regulatory expectations, and safeguard long‑term insurability.
How the Howden team can help you
To navigate the risks of greenwashing and avoid greenhushing, you need assurance. With our expertise, we can help you gain that confidence. Whether you need a quick review of your claims, insights on upcoming legislation, a thorough legal assessment of your green claims, training for your MarComms teams, or insurance options, we provide comprehensive support in sustainability, and risk management tailored to your needs.