Over the past decade, many organizations have improved their carbon footprints, from recyclable and biodegradable packaging and single-use plastic to planting trees and reducing their greenhouse gas emissions. However, some businesses and companies looking to boost their eco-friendly image without committing to serious changes and addressing environmental issues have been associated with false green marketing. We call this "Greenwashing."

What is Greenwashing?

Greenpeace and the Environmental Protection Agency define greenwashing as making false and misleading claims about a product's environmental benefits or practices, services, technology, or company practices. Greenwashing typically involves companies spending more money on advertising and marketing than on implementing sustainable business practices that minimize environmental impact. These false green claims can deceive consumers into believing that a product or company is more environmentally friendly than it is, leading to increased sales and profits. As a result, false advertising, misleading initiatives, and groundless claims have increased green investors' exposure to risks emerging from potential lawsuits from activist groups, image deterioration, and some heavy loss in assets invested.

Why is Spotting Greenwashing Important?

Greenwashing is a growing concern for investors as they look to make sustainable and responsible investments. Therefore, spotting greenwashing practices is important for these firms. Here's why.

The deceptive practices used by greenwashers can have significant implications for the integrity of investments made in what investors believe to be sustainably operated companies or sustainable funds. In other words, greenwashing makes it difficult for investors to distinguish between genuinely committed to sustainability companies and those merely making false claims about their environmental practices. As a result, investors may unknowingly invest in companies that are not as sustainable as they claim to be, which can harm their financial returns and the environment. Therefore, it's essential for investors to be aware of greenwashing tactics and to carefully research companies before investing in them to ensure that their investments align with their values and contribute to a more sustainable future.

What Are the Challenges to Detecting Greenwashing?

It's challenging to produce an accurate assessment of environmental, social, and governance (ESG) factors, which gives companies the opportunity to cover or hide ineffective and fake green initiatives.
According to Regtank, some of the main challenges to detecting greenwashing practices are the following:

• Lack of reporting standards: some investors believe that we haven’t universally agreed upon a set of standards to determine whether a product is ESG compliant.
  
• Lack of transparency: greenwashing companies don’t disclose the specificities of their “green campaigns,” which makes it difficult for investors and consumers to fact-check and evaluate their sustainability claims.
• Limited consumer awareness: false marketing strategies could be based on a combination of the consumer’s eco-consciousness and brand loyalty. As a result, consumers become less aware of the misleading strategies greenwashing companies use to sell their products.

Ultimately, these factors may contribute to the inaccuracy and limitations of ESG data and scores, which makes it easier for greenwashers to get away with their false marketing campaigns. Consequently, detecting greenwashing requires scrutiny of environmental claims made by companies and an understanding of the complex supply chains and manufacturing processes involved in producing products and services.

To learn more about greenwashing and have access to real-life case studies, download this comprehensive report:

How Does Artificial Intelligence Detect Greenwashing?

As greenwashing practices increase, activist investors, experts, journalists, and even the general public are spreading awareness of the issue using social media, news outlets, forums, and blogs, among other means.
Recently, artificial intelligence (AI), particularly natural language processing (NLP), has proven to be effective in the early detection of greenwashing by analyzing vast amounts of qualitative data publicly available on the web. At SESAMm, for example, we apply our NLP capabilities to identify companies likely to engage in greenwashing practices by analyzing text in billions of web-based articles. Our data lake contains over 25 billion web–sourced articles, sourced from four million news, blogs, social media, and forum discussions on five million public and private companies in more than 100 languages. We run these articles through our AI platform tool, TextReveal®, and systematically craft reliable, timely, and comprehensive insights to detect greenwashing, generate ESG alerts, and identify related risks.

The Rise of Greenwashing

Greenwashing, the deceptive practice where companies claim to be more environmentally friendly than they actually are, has become a growing concern in recent years. By analyzing the frequency of web mentions of greenwashing over time, we can observe important trends and understand the factors contributing to this phenomenon.

Recent analyses indicate a significant increase in greenwashing mentions since late 2019. This rise aligns with a growing public awareness of the climate emergency and the increase in media outlets and social media accounts dedicated to exposing greenwashing. The number of mentions escalated from fewer than 200 to over 23,000 in the last quarter of 2023, highlighting the increasing scrutiny of corporate environmental claims.

A noteworthy pattern is the regular occurrence of spikes in greenwashing mentions during the third quarter over the past three years. This timing corresponds with the "pre-COP" periods, leading to critical international climate change management conferences. These periods see heightened discussions around sustainability, with increased attention on companies' environmental practices.

Greenwashing in the Energy Sector

The energy sector, particularly the oil industry, has faced significant scrutiny regarding greenwashing. In this context, companies like Shell and ENI have been prominent due to the frequency of greenwashing mentions associated with them.

For Shell and ENI, the volume of greenwashing mentions has fluctuated, with notable increases in specific quarters. For example, Shell saw spikes in mentions during the second quarter of both 2021 and 2022 while experiencing a drop in the third quarter of 2022. ENI has faced similar fluctuations, often linked to legal actions and publicized environmental issues.

Shell's Greenwashing Mentions, ESG Risks, and Initiatives

Shell, a British multinational and prominent player in this sector, has faced considerable scrutiny for such practices. The company has experienced notable spikes in greenwashing mentions and has been involved in several ESG-related risks.

Greenwashing Mentions

We can see an increase in greenwashing mentions in the first half of 2023. Around that period, Shell faced allegations and lawsuits concerning its environmental claims. The company was criticized for misleading U.S. authorities and investors about its energy transition efforts. Additionally, Shell faced public backlash for labeling fossil gas as 'renewable' while reporting record profits. A notable incident involved a shareholder suing Shell's executives over climate risks.

ESG Risks

Shell has faced several ESG-related risks, including legal challenges and pollution issues. In 2021, the company was sued by New York City over climate change-related advertising and filed an arbitration claim against Nigeria concerning a spill dispute. In March 2023, Shell faced another oil spill, this time in another region in Nigeria,  Rivers State, and also saw institutional investors backing a lawsuit against its board over climate risks. The mid-2023 period saw Shell agreeing to pay $10 million for air pollution violations at a Pennsylvania petrochemical plant. Despite its net-zero pledge, the company announced plans to increase fossil fuel production.

ESG Initiatives

Despite its challenges, Shell has also engaged in various sustainability initiatives. In late 2021, the company announced plans to purchase power from the world's largest offshore wind farm. Mid-2022 saw a leadership change with the company's CEO stepping down as Shell aimed to align with its climate goals. The company also planned to deploy 10,000 EV chargers across India as part of its global strategy. In mid-2023, Shell committed to investing $10–15 billion in developing low-carbon energy solutions. Although the company abandoned its lower oil production target, it maintained its commitment to reducing emissions.

Shell's journey underscores the challenges of aligning environmental claims with real actions, emphasizing the importance of transparency and genuine sustainability efforts.

ENI's Greenwashing Mentions, ESG Risks, and Initiatives

ENI, an Italian multinational oil and gas company, has faced scrutiny for such practices. The company has experienced fluctuations in greenwashing mentions and has been involved in a number of ESG-related risks.

Greenwashing Mentions

ENI's greenwashing mentions are fairly low. However, the company has been featured in discussions about greenwashing, especially with recent developments. In early 2022, the company faced criticism for inconsistencies in emissions data and greenwashing activities, as highlighted by the Sereno Regis Study Center. Greenpeace also criticized ENI for using the Sanremo Music Festival as a platform for greenwashing. In May 2023, ENI faced a lawsuit for allegedly lobbying and greenwashing to promote fossil fuels despite being aware of their environmental risks. Greenpeace sued the company, accusing it of knowingly contributing to climate change.

ESG Risks

Over the past 4 years, the oil giant's ESG risks have been few but not inexistent. ENI has encountered several risks, including legal challenges and pollution issues. In 2022, ENI's environmental strategy was deemed a failure, and concerns arose about a pipeline spill into the East Irish Sea. The company also faced legal actions in 2021, including an appeal against a court ruling in an illegal waste case and warnings from the Legality Network to reduce greenhouse gas emissions or face prosecution.

The company faced a lawsuit in early 2023 for allegedly having prior knowledge of the climate crisis. In another incident, a report found that ENI and Shell were responsible for significant pollution in Bayelsa, requiring a $12 billion cleanup.

ESG Initiatives

Despite facing ESG risks, it is visible that ENI has also pursued various sustainability initiatives. In early 2022, ENI and British Petroleum finalized an agreement to create a new independent joint venture in Angola, which will support the energy needs of Angola's growing economy and its decarbonization path and strengthen its role as a global LNG player. In late 2023, the company received Gold Standard recognition from the United Nations for its commitment to reducing methane emissions. ENI also partnered with Luiss University to launch an international network focused on African energy transition and collaborated with RINA to accelerate maritime decarbonization.
ENI has shown interest in renewable energy, as demonstrated by its wave energy project in Pantelleria and its plans for fusion energy in collaboration with Commonwealth Fusion Systems. The company also focuses on sustainable mobility, developing diesel from 100% renewable materials, and promoting clean energy through partnerships.

Shell and ENI both face the challenge of balancing economic interests with environmental responsibility. Despite allegations of greenwashing and environmental risks, both companies have taken steps towards sustainability, such as investing in low-carbon solutions and renewable energy projects. Their experiences highlight the importance of transparency, genuine commitment to environmental responsibility, and the role of public scrutiny in holding companies accountable.

Greenwashing and ESG Investing

In sum, certain companies advertise their sustainability and green initiatives, while in reality, they are making false claims and practicing greenwashing, as evidenced by our analysis using SESAMm's AI and ESG reports. We use AI through TextReveal to generate alternative data for use cases, such as ESG and SDG, sentiment, private equity due diligence, corporate studies, and more. Our technologies can reliably ensure the credibility of ecological initiatives and serve global investment firms, corporations, and investors, such as private equity firms, hedge funds, and other asset management firms, to enhance their investment strategies.

Conclusion

In conclusion, the issue of greenwashing represents a substantial obstacle in the journey towards genuine environmental sustainability, misleading consumers and investors and diluting the efforts of genuine sustainable enterprises. Nevertheless, the emergence of advanced technologies such as Artificial Intelligence (AI) and Natural Language Processing (NLP) indicated a new era of accountability. Innovators like SESAMm are at the forefront, deploying these technologies to effectively unravel and counteract greenwashing practices. This empowers investors, asset, and portfolio managers to discern and align their resources with legitimately sustainable entities. The call to action is clear: a collective demand for transparency and responsibility is crucial.

Reach out to SESAMm

TextReveal’s web data analysis of over five million public and private companies is essential for keeping tabs on ESG investment risks. To learn more about how you can analyze web data or to request a demo, reach out to one of our representatives.

In a recent interview, Jose Salas, Head of Partnerships and Strategy at SESAMm, alongside Kiet Tran and Kat Tatochenko, shared how SESAMm is transforming the landscape of AI-powered text analysis. SESAMm excels in extracting valuable insights from diverse data sources, addressing key issues like ESG controversies and SDG impacts for clients, which include private equity firms and financial institutions.

Salas highlighted SESAMm's distinct approach to technology, emphasizing its role in identifying risks and opportunities for investors. The company's future plans involve embracing generative AI to refine our data analysis further, promising even sharper insights for our clients.
SESAMm's innovative strategies demonstrate our commitment to turning complex data into actionable intelligence, paving the way for smarter investment decisions in the financial sector.

Watch the full interview here:

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.

For decades, private market investors have relied on upfront due diligence as the primary moment to assess ESG, reputational, and operational risk. The logic was straightforward: conduct a thorough review at acquisition, document the risks, and manage the asset from there. That model is now under increasing strain. Not because due diligence is no longer important, but because the environment in which private investments operate has changed fundamentally.

This shift was a central theme of a recent 2026 webinar on private markets featuring Benjamin Krusche, Strategy Director at Clarity AI, and Sylvain Forté, CEO at SESAMm. Both speakers emphasized that one-off ESG due diligence no longer reflects how risk actually emerges over the life of an investment, and why continuous monitoring is becoming essential.

Due Diligence Hasn’t Disappeared - The World Around It Has Changed

Upfront due diligence has always been a cornerstone of private market investing, and it remains essential. What has changed is not the role of diligence itself, but the assumptions that once made a point-in-time assessment sufficient.

Historically, many ESG and reputational risks were relatively static. If an asset appeared clean at entry in terms of governance, compliance, or industry exposure, it often remained so long enough to exit. ESG due diligence, in that context, was largely about establishing a baseline. Today, risk behaves differently.

A recurring theme throughout the webinar was that some of the most material ESG and reputational risks can emerge after acquisition rather than at deal close, especially as holding period durations increase. These risks surface through litigation, regulatory enforcement actions, labor and human rights incidents, or reputational controversies. Signals that rarely align neatly with due diligence checklists.

In private markets, where disclosure remains fragmented, the absence of information at entry does not imply the absence of risk. It simply delays visibility. That said, continuous monitoring is not a complete solution to this opacity. Many private portfolio companies, particularly mid-market industrials, have minimal media footprints and limited public disclosure. Monitoring signals that do not exist produces no insight. Effective coverage, therefore, requires triangulating across multiple data sources, including direct company engagement.

Risk Is No Longer Static - It Is Event-Driven and Fast-Moving

Many of today’s ESG and reputational risks are triggered externally and unfold quickly, often outside management’s direct control. While management-provided information remains important, it is no longer sufficient on its own.

Today, many material risk signals emerge from:

• Media reporting
• Regulatory actions
• NGO investigations
• Court proceedings
• Employee and labor disputes

These signals often appear well before issues are formally disclosed, if they are disclosed at all. As a result, relying solely on point-in-time information captured at acquisition creates blind spots that widen over time.

Longer Holding Periods Increase the Cost of Being Late

Longer holding periods amplify these challenges. Issues that were immaterial (or invisible) at acquisition can surface years later, well beyond the scope of an initial due diligence exercise. When that happens late in the holding period, the consequences can be significant: delayed exits, repricing, or friction during refinancing. But the pressure is also coming from the other direction. Large institutional LPs are increasingly embedding ongoing ESG reporting and monitoring requirements directly into side letters and limited partnership agreements, making continuous visibility not just prudent risk management but a contractual obligation for many GPs.

As SESAMm CEO Sylvain Forté explained during the webinar, “As companies tend to be held in portfolios for a longer period of time, that need for information has increased. Oftentimes, there was a perspective that for direct investment, deal teams would provide sufficient information and management would provide sufficient information on portfolios. But as the timescale is expanding and expanding, and the duration of these investments continues to grow, we see that this has been a real change in terms of making sure that there are no emerging operational risks that would not have been captured at the diligence stage, emerging governance risk, litigation, and reputational risk exposure.”

Scale Has Changed the Equation

This challenge is compounded by scale. Private market portfolios today are larger, more global, and more heterogeneous than in the past. Secondaries transactions make this particularly visible: investors may need to assess and monitor hundreds of assets under tight timelines, often with limited access to underlying companies, making point-in-time ESG assessments particularly fragile and extremely time-consuming in inherited portfolios.

Manual, human-led monitoring processes that once worked no longer scale. The issue is not a lack of expertise; it is a lack of continuous, consistent visibility across portfolios.

From Static ESG Snapshots to Continuous Risk Visibility

What is replacing point-in-time ESG due diligence is not simply “more data,” but a different operating model.

ESG information is increasingly integrated into investment decision-making as a continuous input rather than a one-off compliance step. Benjamin Krusche, Strategy Director at Clarity AI, described this shift clearly: “The classical point-in-time due diligence really is breaking down, and what people are moving towards is a much more continuous updating of the initial thesis, a continuous monitoring of this risk as well.”

Continuous monitoring allows investors to track emerging issues across portfolios, reassess risk as conditions change, and compare exposures consistently over time, something static due diligence packs were never designed to do.

Why This Shift Matters Now

The move away from point-in-time ESG due diligence reflects a convergence of structural forces:

• Faster-moving, event-driven risk
• Greater reliance on external signals
• Longer holding periods
• Larger and more complex portfolios

Taken together, these forces fundamentally change the role ESG due diligence can play in private markets. It is no longer just a gate at entry but an ongoing input into investment and risk decisions.

As Benjamin Krusche commented, by the end of 2026, “the idea that you conduct due diligence once at acquisition and treat it as a finished product will look very outdated. The market is moving toward continuous, fluid monitoring of risk - not a one-off assessment that sits untouched in a data room until exit.”

For private market investors, the implication is not to abandon due diligence, but to recognize its limits, and to complement it with continuous, portfolio-level risk visibility that reflects how risk actually behaves today.