Consumers, regulators, investors and stakeholders might finally have wised up to greenwashing — coined in 1986 by environmentalist Jay Westerveld to describe companies that falsely claim to be helping the environment — but there is a whole laundry list of washing practices that demand their attention. 

For example, there’s pinkwashing and rainbow-washing: deceptively promoting LGBTQI+ causes as evidence of a caring and inclusive corporate culture.

There’s bluewashing: exaggerating a company’s commitment to responsible and sustainable practices. And there’s social washing, which captures all types of misleading posturing around environmental, social and governance (ESG) issues.

The aim is the same: to gain the kudos associated with an ESG leader, without doing the hard work.

Social washing is ‘increasingly common in the modern corporate world’, says Jacques Jacobs, Sydney-based litigation and insurance partner at global law firm Clyde & Co.

‘It has grown in parallel to increasing social awareness of investors and the public,’ he says. ‘In reaction to the public’s growing consciousness of social issues, more and more companies are expressing commitments to social causes to meet consumer and investor expectations and to remain [or to be seen to remain] competitive.’

Jacobs says companies usually engage in social washing by either overstating, misrepresenting or even fabricating their commitments to support social causes. 

‘Many companies are still grappling with ESG and may seek to take a shortcut and attain a higher ESG status by making ambitious representations, as it could allow them to maintain or gain a competitive advantage in their respective market.’ 

On the other hand, he says, some businesses may set unrealistic targets without effective implementation strategies.

‘It is not always easy for anyone, including insurers, investors or the public, to identify social washing versus genuine corporate social responsibility initiatives,’ he adds.

Regulation, reputation and litigation

There are growing risks for organisations around misleading and deceptive conduct ‘if the reality doesn’t stack up to their promises’, says Jacobs. 

‘The risk of social washing backfiring is significant,’ he says. ‘This risk takes the form of reputational harm, potential regulatory action and, potentially, litigation.

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