When Luxury Supply Chains Break Down: What the Loro Piana Case Reveals

Sustainability trends have become ubiquitous in the business world, mainly due to the attention ESG is receiving. To state the obvious, this is a positive trend as it helps push companies to consider their impact on the environment, employees, and customers and ensure their governance practices are sound. However, it also incentivizes actors in the business world to try to game the system through marketing campaigns to improve their reputation.

Through the use of artificial intelligence and other technologies, we embarked on a mission to analyze the sentiment on the web and uncover to what extent companies are incurring reputational laundering techniques to deceive investors, customers, and other stakeholders but also to identify the ones that are actually performing actions to have a positive impact around them.

This analysis dives into the concept of greenwashing and reputational laundering. It reveals the nuanced interplay between genuine sustainability efforts and deceptive practices, offering a new lens to distinguish genuine from false corporate sustainability claims.

Beyond Greenwashing: Reputational Laundering

Let’s start with some definitions. Reputational laundering is deliberately hiding unethical behavior with highly visible positive actions. Greenwashing is just one component of reputational laundering. Another component is the social aspect of it, and it includes various forms of color washing such as purplewashing, pinkwashing, purpose washing, etc. So far, in 2023, greenwashing accounted for 55% of all the volume of reputational laundering mentions on the web. So, the remaining 45% represents color-washing.

TerraChoice defines greenwashing as “the act of misleading consumers regarding the environmental practices of a company or the environmental performance and positive communication about environmental performance."

Colorwashing, on the other hand, refers to a strategy used by organizations to create a positive public image by associating themselves with specific causes, ethics, or moral standpoints.

Beyond the conventional understanding of deliberate greenwashing, there’s a more nuanced concept and less discussed: unintentional greenwashing, where companies inadvertently convey misleading environmental claims. This can occur due to a lack of understanding of the true impact of their products or services, unverified claims, overlooking hidden consequences, unintentional confusion in marketing materials, or insufficient transparency. While these companies may not have malicious intent, their actions can inadvertently misrepresent their environmental efforts and mislead consumers about their commitment to sustainability.

Reputational laundering at a glance

Over the past eight years, reputational laundering mentions have increased steadily. However, from 2021 onwards, they’ve grown a staggering 3.3x. The mentions of reputational laundering are coming from different topics, from false advertising, and misleading practices to lawsuits regarding greenwashing. Furthermore, we have observed a growing number of references regarding the declining trust of the public in corporate pledges, such as those related to 'net-zero' climate goals.

This increase can be attributed to two main reasons: the actual increase in reputational laundering and, more interestingly, the growing awareness from stakeholders (i.e., Investors and eco-conscious consumer base).

According to a report published by the UN Environment Programme (UNEP), climate change lawsuits have continuously surged over the past five years.
Consequently, we analyze mentions of lawsuits related to environmental breaches and detect a significant increase in 2021 – which continues to the present day.

Lawsuit mentions have increased by more than 3x since 2020. These litigations span a spectrum of environmental issues, extending well beyond planned obsolescence practices by major consumer goods manufacturers. We also observe the rise of youth-led climate change lawsuits, instances of oil spills, wildfires, pollution-related legal actions, and the pervasive issue of PFAS contamination.

Breakdown by type of washing

While greenwashing often dominates the conversation around reputational risks, it's crucial not to overlook the social dimension, which tends to receive less attention from the public. Since 2020, we've observed a significant uptick in mentions of greenwashing and its less-discussed counterpart, colorwashing.

Historically, up until 2020, the distribution of mentions leaned toward one-third greenwashing compared to two-thirds colorwashing. However, post-2021, this pattern has shifted. We've witnessed a rise in the frequency of greenwashing mentions, surpassing those of colorwashing and signaling an evolution in the focus of reputational laundering concerns.

During the COP27 conference at the end of 2022, a call was made to verify carbon and other environmental claims and show zero greenwashing tolerance. As a result, there has been a rise in scrutiny, and data now shows an increase in the number of allegations related to greenwashing. Here are a few examples:

June 2022: Head of Deutsche Bank’s DWS stepping after ‘greenwashing’ raids,
October 2023: Suncor accused of greenwashing
September 2023: Greenwashing cases against airlines in Europe, the US,

In analyzing advertisements, we found instances of reputational laundering through various means. Some companies engaged in social washing, while others used sportwashing to bolster their reputation. The mining and energy industries were particularly guilty of this practice. Meanwhile, the communication industry, including companies such as Netflix and Disney, was associated with black and whitewashing.

Inspecting the Regulatory Landscape

To analyze the regulatory environment of reputational laundering, we studied the effects of different legal frameworks and government organizations on greenwashing and other forms of reputational laundering. We measured the influence of legal frameworks and regulatory bodies on greenwashing by analyzing the quarterly growth of greenwashing mentions over the study period.

In this analysis, we define the concept of legal frameworks by capturing references related to the 'Green Claims' directive, Sustainable Finance Disclosure Regulation, EU Taxonomy, Green Product Certification, Fair Labeling and Advertising Act, Non-Financial Reporting Directive, FTC Act, FTC Green Guides, etc.

Concepts of Regulation bodies are defined by references to governments and Supranational entities (i.e.,  US government, FTC, SEC, Chinese government, Japanese government, etc.) or regulatory agencies established to safeguard the environment (United Nations Environment Programme (UNEP), Environmental Protection Agency (EPA), European Environment Agency (EAA), Intergovernmental Panel on Climate Change (IPCC), etc.)

Over the past three years, mentions of frameworks and laws have grown substantially, with increasing ESG scrutiny, new green claims guidelines, and a focus on sustainability and ESG reporting.

There has been a slight increase in the mentions of regulatory bodies over the years, mainly due to the growing interest in greenwashing, which has peaked during events like COP26 and COP27. Legal frameworks and regulatory bodies have played a significant role in the fight against greenwashing. Although there is no decrease in the mentions of this topic, the growth rate has reduced significantly. In fact, the quarter-on-quarter growth for greenwashing web mentions has been decreasing lately.

The trends reveal an interesting fact that there is a negative correlation between the growth in mentions of frameworks, laws, and regulatory bodies and the growth in mentions of greenwashing. Though the mentions of greenwashing are still increasing, the growth rate has significantly decreased from a 75% quarterly growth rate to 10% in the last year (except for spikes related to controversial events such as Greta Thunberg labeling COP26 as a “greenwash festival,” and not attending COP27).

Conclusion

As we navigate the landscape of corporate sustainability, it becomes evident that distinguishing genuine efforts from greenwashing is not just a matter of skepticism but a necessity. This exploration underscores the importance of vigilant analysis and the role of AI in unmasking deceptive practices. It calls for a collective commitment to transparency and accountability, empowering stakeholders to make informed decisions and advocating for a future where corporate responsibility aligns authentically with sustainable development.

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.

As the year closes, it's time to reflect on some of your favorite pieces of content, so we've compiled a list of the top 8 blog posts highlighting the most popular and insightful content we've published. From investor guides to detecting greenwashing practices, these posts have resonated with you, our readers, and hopefully, continue to provide valuable information and inspiration. Join us as we look back at the top 8 posts of the year and see what made them stand out.

#8 What Investors Ought to Know About Knowledge Graphs: The Core of Text Analysis

This piece explains the pivotal role of knowledge graphs in enhancing text analysis for investors. It clarifies how these graphs contribute to a more nuanced understanding of data, aiding in investment decisions. Readers appreciated the clear, practical insights into how knowledge graphs strengthen SESAMm’s cutting-edge AI technology.

#7 It’s 2023, AI Innovation is Here and Only Getting Better

In this article, Sylvain Forté presents an optimistic view of the future of AI in the financial sector, focusing on the rapid advancements in AI. He discusses how these technologies are evolving and what this means for investors and companies alike. Readers were captivated by the forward-looking perspective and practical implications of these innovations.

#6 What Investors Ought to Know About SDGs & AI: A Quick Guide

This article serves as a guide on the relationship between Sustainable Development Goals (SDGs) and AI. It explains how AI facilitates the identification and tracking of SDG-aligned investment opportunities. Our audience found the straightforward approach and practical examples particularly enlightening for understanding the intersection of sustainability and technology.

#5 SESAMm Incorporates Generative AI to Enhance ESG Risk Mitigation and Process Efficiency in the Finance Sector

Highlighting SESAMm's innovative approach, this piece details the incorporation of generative AI into ESG risk mitigation. It underscores the significant improvements in process efficiency and accuracy, which resonated well with our audience, particularly those keen on technological advancements in finance.

#4 How Successful Investors Are Using AI to Get ESG Data: A Quick Guide

This guide offers a practical look at how AI is revolutionizing and simplifying ESG data for investors. It provides real-world examples and strategies, making it a favorite among readers for its direct application in their investment processes.

#3 How Organizations Are Using AI To Detect Greenwashing

This article addresses the increasingly relevant issue of greenwashing, showcasing how AI tools are employed to detect and mitigate it. The relevance of this topic in today’s sustainability-focused investment landscape made this article highly popular among our readers.

#2 ebook: Unmasking Greenwashing: How to Identify Genuine and Deceiving Sustainability Initiatives with AI

This comprehensive ebook gained popularity for its detailed exploration of AI’s role in distinguishing between genuine and deceptive sustainability initiatives. It provided readers with a deeper understanding of the intricacies involved in evaluating sustainability claims, making it a valuable resource. Download the ebook.

#1 SESAMm Raises €35M in Series B2 to Grow its ESG and Sentiment Analysis Business

Topping our list is the announcement of SESAMm’s Series B2 funding. This milestone article not only signifies SESAMm's growth and success but also reflects the increasing importance of ESG and sentiment analysis in the financial world. The article’s blend of business success and industry relevance made it the year’s highlight for our readers.

Thank you for reading through this year's eight most popular blog posts. Which is your favorite, and how would you rate them?

Let us know what you think on Twitter or LinkedIn.

In a recent interview with Climate Action, Maha Chihaoui, ESG Analyst at SESAMm, discussed how SESAMm’s AI-powered solutions are reshaping ESG analysis. Maha, who leads ESG research and methodology development at SESAMm, outlined how the company addresses the challenges of self-reported ESG data, which can be inconsistent, biased, and outdated.Discover Maha’s take on how AI-driven insights and risk detection transform ESG analysis below.

1. Many ESG datasets rely on company self-reporting. What are the main limitations of that approach, and how does AI help address them?

Self-reported ESG data can be incomplete, inconsistent, or subject to bias, as companies may selectively disclose positive information while downplaying or omitting negative impacts. This lack of standardization also makes it difficult to compare ESG performance across different firms or industries. Additionally, self-reporting often lags behind real-time events, reducing the timeliness and relevance of the data.

At SESAMm, we take a complementary, “outside-in” approach using AI. Our state-of-the-art AI algorithms analyze millions of public documents every day, including news articles, NGO reports, legal filings, and more, to detect ESG-related controversies and risks. This allows us to surface controversies in near real-time, helping investors get a more accurate and timely picture of actual behavior.

2. One of SESAMm’s latest innovations is real-time UNGC violation screening. Why is the UN Global Compact such a critical framework for investors and corporates today?

The UN Global Compact (UNGC) holds critical importance for investors because it carries strong global credibility as a United Nations–endorsed initiative, signaling alignment with universally accepted norms that enhance corporate reputation and stakeholder trust.

The framework provides holistic ESG guidance across key areas—human rights, fair labor practices, environmental sustainability, and anti-corruption—enabling companies to manage risks and opportunities comprehensively. By committing to UNGC principles, companies proactively mitigate legal, operational, and reputational risks associated with violations in these areas.

For investors, especially those subject to SFDR, the UNGC is directly linked to regulatory obligations. PAI indicator #10 specifically asks whether a company has violated the principles of the UNGC or other international norms. Our tool is built on a clear and concise methodology that enables thorough screening, and with the support of advanced AI models, it makes the assessment faster, more consistent, and scalable—efficiently identifying violations or risks of violating the UN Global Compact principles across thousands of companies, thereby supporting both compliance and active risk management.

3. How does SESAMm's AI-driven UNGC screening work in practice?

The SESAMm's AI-driven UNGC screening identifies and classifies ESG controversy events based on their potential breaches of the UN Global Compact Principles into three risk levels:

• Violator (clear and severe breaches),
• Watchlist (possible but unconfirmed violations),
• Low Risk (concerns without clear evidence).
  

These risk statuses are dynamic, reflecting changes in a company’s behavior over time. The system emphasizes transparency by providing detailed explanations and audit trails for each event, enabling clients to investigate further rather than relying on opaque “black box” results. Ultimately, event-level flags can be aggregated to guide company-level decisions, such as exclusions from investment universes.

Clients can filter and explore these events within our dashboards or receive alerts and reports as part of their risk monitoring workflows. What makes this unique is the combination of speed, granularity, and global scale—we’re able to capture and classify relevant controversies days or even weeks before they appear in traditional ESG data sets.

4. Based on your experience, how are investors using real-time controversy data in their decision-making processes?

We’re seeing investors use real-time controversy data in several key areas. During due diligence, it helps identify hidden risks in acquisition targets or portfolio companies, especially in private markets where traditional ESG data is sparse. For ongoing monitoring, firms use our alerts to track emerging controversies that may affect their holdings or counterparties, from suppliers to borrowers.
We also see it integrated into ESG scoring models, exclusion lists, and engagement strategies. In some cases, controversy data prompts further investigation or direct conversations with company management. It enables investors to act sooner and with greater confidence—before a risk becomes reputational or regulatory damage.

5. SESAMm recently launched new AI ESG Assessment Reports. How do these differ from traditional ESG ratings?

Traditional ESG ratings are often backward-looking and based largely on disclosed information. Our AI ESG Assessment Reports take a different approach—they’re built entirely on public data analyzed by AI in near real-time. The reports cover company-level ESG controversies, regulatory and industry pressures, sanctions screening, and more.
What makes them powerful is the speed and coverage. Users can generate a detailed ESG report on any public or private company—globally—in under 30 minutes. That includes small or mid-cap firms that may not be covered by major rating providers. It’s an accessible, scalable solution for firms that need faster, more flexible ESG insights in today’s fast-moving environment.

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.