In recent years, consumers have become increasingly conscious about the impact of their purchases on the environment and society. As a result, many companies have jumped on the bandwagon of sustainability and green initiatives to attract consumers who prioritize ethical and environmentally friendly products. However, not all companies are authentic in their claims and practices, leading to a phenomenon known as greenwashing. In the first article of this two-part series, we gave an in-depth analysis of reputational laundering and greenwashing. In this article, we will explore the prevalence of greenwashing across various industries. We will also study the case of a company practicing greenwashing and a genuinely sustainable company.

Reputational Laundering by Industry

Reputational laundering is a common practice across various industries. Traditionally, the ‘Oil and Gas’ and ‘Financial’ industries have been identified as the main culprits. However, we have recently observed a substantial increase in the frequency of mentions in the ‘Food & Drug Retail’ industry, surpassing all other sectors by a significant margin. To evaluate this trend, we calculated the percentage of reputational laundering mentions in relation to the total number of mentions for each industry.

Reputational laundering over time

We looked at the last three years to find how each industry has evolved. Most industries have remained fairly static within a reasonable range. However, ‘Industrials’ have seen a significant decrease in mentions. Conversely, ‘Oil and Gas’ and ‘Food & Drug Retail’ significantly increased in 2023.

‘Food & Drug Retail’ more than tripled its mentions percentage due to a large number of mislabeled eco-friendly products (Walmart & Kohl’s) and green initiatives claims (Coca-Cola, Unilever, Amazon…).

The ‘Oil and Gas’ industry ranked second, and its recent spike can be associated mainly with greenwashing on actions such as their direct negative impact on the environment and the impact on local communities (TotalEnergies - Uganda & Tanzania). Another example is related to sportswashing with ‘Oil and Gas’ advertising heavily in sports events and even sponsoring sports clubs.

The financial industry has seen a decrease in mentions in 2023. However, its overall numbers are still significant. Most mentions we found were related to their investment activities in fossil fuels (HSBC to stop funding new oil and gas fields after greenwashing criticism. Goldman Sachs Facing SEC Probe of ESG Funds in Asset Management).

When examining the prevalence of reputational risks across sectors, greenwashing is the predominant concern in most industries. This is particularly evident in sectors like Industrials, Oil & Gas, and Financials, where greenwashing mentions are especially prominent. On the other hand, Telecommunications & Social Media stands out as an exception, with the bulk of its mentions skewing towards colorwashing, which encompasses specific practices such as blackwashing and sportswashing (Netflix accused of 'blackwashing' new docu-series Queen Cleopatra by casting black British actress).

• Oil & Gas: Oil Majors Shell and BP Accused of Greenwashing by Greenpeace, Research Reveals Minimal Renewable Energy Generation and Inadequate Investments – Technology Solutions for Home (itsforhome.com)
• Food & Retail: Costco class action claims retailer falsely advertises cranberry juice as containing no preservatives - Top Class Actions
  Kellogg beats claims it falsely advertised ‘veggie’ Morningstar meatless products - Top Class Actions
  Costco, Dreyer's ice cream bar class actions over false advertising claims dismissed - Top Class Actions
  Walmart class action alleges company misleads consumers over amount of olive oil in mayonnaise - Top Class Actions
• Financials: SEC sanctions Deutsche Bank for greenwashing, AML violations | Investment Executive

Use Case: Focus on the Financial Industry

The financial industry's footprint in reputational laundering might not be the most pronounced in terms of direct mentions, but its influence stretches wide via its investment activities in other sectors. This means the ripple effect of the financial sector's actions can be substantially more impactful than those in other industries. Our investigation into this phenomenon included a rigorous examination of the frequency with which financial institutions are cited in discussions of greenwashing. Additionally, we assessed their efforts in driving positive impact initiatives. We scrutinized a group of 144 financial entities, arranging them on a scale from the greatest to the least number of greenwashing mentions in proportion to their overall volume of mentions.

Top financial firms by greenwashing claims

Below, we listed the financial firms with the highest relative volume of greenwashing mentions. Beyond the first two institutions on the list, which are related and had a big scandal in 2022, we can see many very recognizable names, such as Blackrock (investing in fossil fuels), JP Morgan (for fossil fuel investment policies), and HSBC (false advertising green claims) making our top ten list.

Case Study: DWS Group

The DWS Group, previously known as Deutsche Asset Management, found itself in the spotlight for all the wrong reasons in 2022 and 2023. The scandal landed them at the top of our list, a position highlighted by the significant number of mentions they received — a figure that is an order of magnitude higher than that of any other entity on the list.

As a German asset management firm under the umbrella of Deutsche Bank, DWS was embroiled in severe greenwashing allegations. The last two years were marked by high-drama events: starting with greenwashing allegations at the end of 2021, their offices were searched in May 2022, which led to the resignation of the DWS chief in June 2022. The saga concluded with a substantial $25 million fine paid to U.S. regulators in September 2023.

The accompanying chart provides a visual representation of the timeline for these events, contrasting the number of absolute mentions with those specifically related to greenwashing. The alignment in the timing and scale of these mentions with the unfolding events is unmistakable.

Best-in-class companies

In our effort to wrap up our study on an optimistic note, it's important to recognize that the heightened scrutiny of greenwashing and its associated initiatives ultimately serves a beneficial role by significantly raising our collective consciousness about crucial ESG issues.

While it's true that numerous companies have come under fire for greenwashing, it's equally important to highlight those that are genuinely advancing initiatives with positive environmental and social repercussions across the globe.

Employing the same method used to scrutinize financial firms implicated in greenwashing, we focused on the same group of 144 companies, honing in on the top 10 that stood out based on normalized mentions of their positive environmental actions.

The findings are quite encouraging: mentions of these positive initiatives dwarf those of negative impacts when viewed as a proportion of total mentions. Brookfield Asset Management (Brookfield) shines as the most notable, garnering almost double the mentions of its closest peer.

Also noteworthy is BlackRock's appearance on this list. Despite its presence on the greenwashing list, BlackRock has made strides in positive efforts, too. The company's initiatives—some counterbalancing the negative—have received more attention for their positive impact than for greenwashing, suggesting a complex but proactive ESG engagement.

Furthermore, companies like EQT, Berkshire Hathaway, and Standard & Poor's have actively engaged in initiatives that drive positive impact, earning them significant—and rightfully so—media coverage.

Case Study: Brookfield Asset Management

Brookfield's presence on our top 10 list is well-founded, reflecting the substantial conversation around their significant efforts in environmental sustainability. The company has undertaken numerous initiatives aimed at reducing its ecological impact. These include launching a $7 Billion Global Energy Transition Fund, collaboration on a sustainable neighborhood project in Texas, a commitment to planting thousands of trees, and the transition to zero-emission electricity in their offices.

In terms of visibility, these environmental initiatives represent a significant portion of the company’s profile, surpassing 50% of total mentions in September 2022. This highlights the dominant role these actions play in the public discourse surrounding Brookfield.

The company’s polarity(1) — a measure of sentiment in mentions — shows a steady and positive trajectory beginning in late 2021. This trend points to a growing positive reputation and increased positive online discussions regarding the company.

Web Sentiment Analysis: Financial Industry vs. DWS & Brookfield

When assessing the landscape of ESG engagement within the financial sector, we consider the comparative reputations of two key players: the leader in positive impact initiatives against the firm with the highest number of greenwashing mentions. How do they stack up against the broader sentiment within the financial industry?

The finance industry at large grapples with a challenging reputation shaped by various issues, including regulatory shortcomings, perceived corporate greed, opacity, and environmental impacts, among others.

Against this backdrop, we observe that:

DWS: The company's reputation trajectory is on a downward slope compared to the industry average, with the aftereffects of recent controversies culminating in a reputation low as of October 2023.

Brookfield: In contrast, Brookfield's commitment to the environment appears to buoy its reputation, maintaining a consistently positive trend that surpasses the market standard. Notably, from January 2023 onward, there is a discernible uptick in positive sentiment.

Conclusion

While the prevalence of greenwashing poses a considerable challenge within the corporate sphere, our study reveals a silver lining. The intensive scrutiny and debate surrounding environmental, social, and governance (ESG) issues have led to heightened awareness and, more importantly, action. Amidst the cacophony of claims, our analysis has found a discernible pattern of positive ESG initiatives overshadowing negative impacts, indicating a shift towards genuine sustainability efforts.

Particularly encouraging is the performance of certain frontrunners like Brookfield Asset Management, which has emerged as a beacon of positive action, outpacing its peers in driving meaningful change. This illustrates the potential for firms to lead by example and underscores the importance of rigorous analysis in distinguishing substantive ESG commitments from superficial ones.

Ultimately, this study underscores the transformative power of informed scrutiny and the pivotal role that advanced analytical tools play in propelling the ESG agenda forward. As the financial community continues to refine its approaches to evaluating ESG metrics, we can remain cautiously optimistic about the journey from mere green-tinted narratives to deeply rooted, impactful corporate practices.

(1) Polarity aggregates positive and negative sentiment (opinions, reviews) on a company. It ranges from -1 to 1. A 0 score means that positive and negative sentiment are equal. Well-regarded brands generally have polarity scores over 0.5.

At SESAMm, we used AI to study billions of articles and analyze greenwashing trends. Download this comprehensive ebook for an in-depth understanding of the evolving landscape of reputational laundering, notably greenwashing, and dive into its trends in the corporate world.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

If you've been following SESAMm, you've probably noticed that we care about environmental, social, and governance (ESG) factors when researching, analyzing, and monitoring companies for portfolios. After all, ESG data is useful when making business and investment decisions. But what about SESAMm? Does it care about ESG as a company?

On the one hand, SESAMm could analyze ESG risks and opportunities on private and public companies worldwide without regard to its own ramifications on the world at large. On the other hand, what kind of service provider would SESAMm be if it didn't "walk the talk," as the saying goes? What good would SESAMm produce if it didn't follow the same ESG guidelines it delivers scores about?

SESAMm wants to operate the same way its clients would expect from firms in their portfolios, a way that it would support and be proud of. That's why management has developed SESAMm's ESG manifesto.

SESAMm's ESG manifesto purpose

ESG analysis, monitoring, and alerting are a substantial part of SESAMm's activities, so it's the company's mission to actively develop ESG and UN Sustainable Development Goals (SDG positive impact) indicators on millions of public and private companies. Many of the largest financial institutions and corporate ESG teams trust SESAMm to help monitor assets, suppliers, and clients.

SESAMm's ESG beliefs

SESAMm's management believes that:

1. The financial sector and large corporations have a considerable role in ESG. They are vital to achieving the goals set by The Paris Agreement.
2. ESG data is essential in enabling the transition toward responsible investment for financial institutions and corporations.
3. Current offerings lack ESG ratings coverage, lack transparency, and provide inadequate indicators, making it difficult for leaders to set objectives.
4. AI is the technological solution that will enable leaders to solve these issues and generate the right data with the right transparency, coverage, and frequency.

SESAMm's environmental actions

First, to reduce its ecological footprint, SESAMm has chosen to work with server hosting providers that use only renewable, non-carbon energy. Scaleway, for example, is a French internet hosting company that optimizes its hardware by reducing the incidence of server overheating.

Second, SESAMm has a lease contract to rent and replace computers every three years. The computers are then refurbished and reused, significantly reducing their environmental impact. Similarly, cloud infrastructures such as AWS or Scaleway recycle some hardware, such as hard drives, also to preserve the environment.

Third, SESAMm favors environmentally-friendly office accommodations. For example, the company measures and limits transportation needs by enabling employees to work remotely up to four days a week. It has also implemented waste sorting throughout its offices and taken actions to reduce energy consumption and waste, such as offering reloadable batteries and water dispensers to avoid plastic bottles. Further, most of SESAMm's offices are in co-working spaces, like WeWork, which offers reusable tableware and solar-powered energy.

Notes: In 2022, SESAMm is the only French company selected for the Green Finance Subsidy Program for Tokyo Market by the Tokyo Metropolitan Government. In the future, SESAMm plans to launch climate workshops ("La Fresque du Climat") to increase employee awareness.

SESAMm's social actions

Diversity, equity, and inclusion

SESAMm makes efforts to promote diversity and ensure an inclusive workspace for everyone. For example, even though the lack of women in tech companies is a challenge shared by many startups, SESAMm's workforce currently comprises 25% of women, of which 25% are managers. Some of SESAMm's women workforce also hold highly strategic positions, such as Chief Financial Officer, HR Manager, Technical Lead, and Project Manager, to name a few.

Moreover, SESAMm's teams are composed of ten nationalities across various international offices. And when possible, the company promotes international mobility of its talents, such as a transfer to New York or talent passports to enable employees abroad to work in France.

Diversity in education and training

SESAMm also values diversity in education and training. For instance, the company favors the internal sharing of knowledge through mentorship and internal training and enables employees, newly graduated or in professional reconversion, to be trained and develop new skills for their careers. Currently, the team accounts for 21% of employees who were first interns at SESAMm and now hold permanent positions. 68% of employees hold advanced graduates (Master's degrees and more), 30% are undergraduate (associate and bachelor's degrees), and 2% hold only a high school diploma.

Work-life balance

The company values a healthy work-life balance and is committed to improving working conditions and ensuring well-being. SESAMm has implemented several measures to reinforce work-life balance, mainly by allowing employees to organize their week as they wish and to work remotely up to four days a week. In addition, SESAMm published a charter on the right to disconnect to strengthen everyone's right to disconnect from their professional communication tools. SESAMm won three awards from ChooseMyCompany: HappyAtWork, TechAtWork, and WorkAnywhere in 2021 for providing employees with a healthy work-life balance.

In 2021, SESAMm implemented several tools to automate processes and facilitate the employees' daily life, including an HRIS and a tool for annual reviews. The management of skills and careers and the implementation of mentoring and training are at the heart of SESAMm's HR roadmap for the years to come. The company also implemented an anonymous internal tool, Poplee Engagement, to measure employees' well-being at work and collect their suggestions for the company.

SESAMm's governance actions

SESAMm relies on a supervisory and strategic board and an internal executive committee, which are consulted for every important matter, even if not required by the SHA. The board comprises investors with diverse expertise from different geographies—the U.S., Canada, and Europe. The founders are all board members and own 50% of the voting rights. SESAMm is a fundamental trade-off between entrepreneurs' freedom to pursue their distinctive visions for value creation and investors' need to ensure management accountability.

Employees are involved in the company's success through option plans, and wages are homogeneous across the company. The executive committee is transparent with SESAMm's employees and shares information on the strategy during regular "Ask Me Anything" meetings occurring once every six weeks, during which collaborators can ask any questions anonymously or not.

Since the recruitment of senior profiles, such as the Scrum Master and a Head of Agile, and automation through the implementation of new internal tools, the company has a better organization with clarified roles and responsibilities. SESAMm also optimized the structure of KPIs reportings, enabling a better long-term plan and decision-making process.

To reinforce these actions, notably in ecology and social matters, the company has implemented several charters and guidelines in the last few years, like an ethical charter, teleworking charter, right to disconnect, and IT charter.

SESAMm's ESG manifesto summary

SESAMm's leaders believe we can't sit on the sidelines while global issues pervade society. We must play an active role in addressing our greatest challenges by looking in the mirror and looking at ourselves. Through hard work, perseverance, and accountability, we believe we can make a difference to help our people, economy, and planet thrive.

Learn more: “How Successful Investors Are Using AI to Get ESG Data: A Quick Guide”

Reach out to SESAMm

Is ESG data important to you? Reach out to one of our representatives and let us know how we can help you with your ESG strategy.

SESAMm, a leading provider of AI-powered ESG and reputational risk data, is pleased to announce that Flexstone Partners, a global private equity investment manager and advisor, has selected SESAMm’s platform to strengthen its pre-investment screening and portfolio monitoring processes.

With approximately €10 billion in assets under management, Flexstone Partners invests globally across all private asset classes, including private equity, mezzanine, and infrastructure, through primary and secondary investments in funds, as well as direct co-investments in buyout & growth capital transactions. As a signatory of the UN-supported Principles for Responsible Investment (UN PRI) and an affiliate of Natixis Investment Managers, the firm integrates ESG considerations across its strategies and throughout the investment lifecycle.

As part of its investment process, Flexstone Partners systematically screens potential and existing holdings for controversies and reputational risks. The firm will now leverage SESAMm’s AI-powered ESG and reputational risk data to identify issues such as human rights violations, corruption, and environmental breaches, even among non-listed firms.

“This collaboration marks another milestone in our work with Natixis Investment Managers’ affiliates,” said Sylvain Forté, CEO and co-founder of SESAMm. “Flexstone stands out for its rigorous and forward-looking approach to ESG integration. We’re proud to support their teams with AI-powered insights that help strengthen due diligence and portfolio monitoring across their global investments.”

With SESAMm, users gain real-time visibility into ESG and reputational risks across millions of public and private companies worldwide. The platform leverages multilingual large language models to analyze content from over 4 million sources in 100+ languages, providing fully auditable data and early detection of potential red flags, empowering investment teams to strengthen both due diligence and ongoing portfolio monitoring.

“SESAMm’s controversy insights demonstrated both speed and quality, and the platform appears to integrate smoothly into our existing due diligence and monitoring processes. While we have not yet fully deployed the tool, we see strong potential for enhancing ESG risk identification and mitigation,” said Samira Boussem, Managing Director, Global Head of Sustainability Investment at Flexstone Partners. “We expect that it will bring a new level of efficiency to our analysis.”

About Flexstone Partners

Flexstone Partners ("Flexstone") 6 is an affiliate of Natixis Investment Managers, one of the largest asset managers in the world with over $1,427 billion in assets under management. The company manages $10.6 billion in assets 7and offers institutional investors worldwide tailored investment and advisory services in private equity. Flexstone's strategies in co-investment and the secondary market primarily focus on small and mid-cap segments, growth equity, and emerging managers in the United States, Europe, and Asia. With over 56 experts based in New York, Paris, Geneva, and Singapore, Flexstone’s international team addresses the needs of its clients around the globe. Composed of a team of specialists with complementary profiles, Flexstone has in-depth market knowledge and unique expertise in private equity. It is present in the most promising markets across North America, Europe, and Asia. For more information: www.flexstonepartners.com

About SESAMm

SESAMm is a global leader in controversy data, leveraging advanced large language models and generative AI to uncover ESG, reputational, and supplier risks in seconds. Our AI-powered platform surfaces real-time insights, even in low-disclosure markets, on millions of companies and infrastructure projects, supporting more informed decisions, enhanced due diligence, and regulatory alignment at scale. We work with leading firms, including Carlyle, Warburg, Natixis, RBI, Sustainable Fitch, Oddo, and others. SESAMm has raised $50M from renowned investors and operates across four continents. Learn more at www.sesamm.com

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.