The UK has seen less greenwashing in company reporting, according to a new study—likely because of mandatory carbon reporting rules.

Academics in Canada looked at data since mandatory carbon reporting was introduced in 2013 and found that three different types of greenwashing had decreased.

The team concludes: “We document a reduction in greenwashing following the introduction of mandatory greenhouse gas emissions reporting.”

The conclusions come after textual analysis of more than 2,000 reports. The report says carbon greenwashing fell 30-44% after mandatory reporting was imposed. There were added benefits too. Non-carbon greenwashing also fell by 23-40%, suggesting a “spillover” effect.

The writers, Jody Grewal, Gordon Richardson and Jingjing Wang, say the reduction in greenwashing was due to companies not being able to hide from the measures they were forced to publish.

“We conjecture that this is due to a strengthening of the reliability and usability of disclosed [greenhouse gas] data under mandated reporting, which enhances users’ reliance on it and, in turn, disciplines firms’ qualitative discussions.”

The report documents three types of greenwashing in annual reporting that appeared to have been reduced. The first is excessively lengthy carbon reduction reports that are disproportionate to actual environmental performance; the second is tone, or excessively positive language; and the third is imprecise or unverifiable forward-looking commitments.

The ‘walk-talk’ gap

These kinds of greenwashing have been highlighted in previous studies focused on the “walk-talk” gap that companies often create in their disclosures.

Positive effects on greenwashing were found mainly in firms with higher media exposure or poor environmental performance.

Mandatory reporting is also thought to have led to “increased oversight”, as more senior executives took over responsibility for non-carbon issues, such as water management.

The report comes at a time when UK regulators are working on beefing up sustainability, with the introduction of new standards written by sustainability standards boards.

Policies addressing sustainability has proved controversial. In the EU, officials softened the rules contained in the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

Washington has complained bitterly that US companies must follow CSRD and CSDDD rules, despite the reforms.

In the US last week, fresh clashes emerged over efforts to see regulators rule that ratings agencies should not use sustainability criteria to reach their rating decisions.

Elsewhere, there are concerns that many companies outside the US are falling short of emissions targets set under the Paris Agreement.

Sustainability and emissions targets remain controversial despite evidence of climate change. The latest data demonstrates that mandatory reporting of greenhouse gases makes companies accountable and, as a consequence, greenwashing is reduced. That’s a small reason for optimism.