A case for passing a greenwashing law

Sustainability”—an ideal industries were once urged to earnestly aspire for—has in recent years been co-opted as a market strategy to entice “green-minded” clients and deflect scrutiny into commercial activities’ environmental impacts. Such stark contradictions have recently been highlighted as Typhoon “Tino” ravaged through the archipelago, with exacerbated flooding in Cebu imputed to the controversial The Rise at Monterrazas, once hyped as a sustainable and eco-friendly commercial development.

To address the asymmetry between claims about business performance and actual metrics, various jurisdictions have adopted regulations defining and penalizing “greenwashing.” Since then, major airlines have been investigated for touting carbon-neutral flights while using dubious offsetting schemes, titan energy companies fined for overstating carbon neutrality commitments while still investing in fossil fuels, and a fast fashion company penalized for bogus use of a “circular system” in its production processes.

In the Philippines, ranked most prone in disaster risk under the World Risk Index 2025, commercial talk remains cheap in the absence of a greenwashing law. Such a law should not only promote accurate market signals by regulating commercial speech, thereby empowering consumers and investors to either support or withdraw from businesses depending on the latter’s environmental impacts. More importantly, a greenwashing law should push companies to seriously commit to environmental, social, and governance (ESG) standards. Granted, penalizing greenwashing would, at most, serve as a stick, with more structural incentives for pro-environment conduct serving as carrots.

A few such bills are, in fact, pending in the 20th Congress. For example, House Bill No. 4420 and HB 3458, both entitled the Climate Accountability (or “CLIMA”) Act, frame greenwashing as a consumer protection issue, obligating businesses to convey accurate information about the environmental soundness of their commercial activities. Under these bills, greenwashing can manifest as “outright false statements, understating impacts, omitting trade-offs, absence of proof backing up claims, [and] false third-party certifications.” These bills propose the crafting of joint implementing rules by various agencies with environment-focused mandates, with lawsuits filed under the Supreme Court’s Rules of Procedure for Environmental Cases.

Had such law already been in place, and given the mounting criticism against the property development amid the onslaught of Typhoon Tino, could the business behind The Rise at Monterrazas be held to account? Greenwashing first contemplates that a business make a declaration about its environmental targets or performance. Since its inception, The Rise was marketed as a sustainable development, promising to rise in harmony with nature as a green community. More crucially, what pieces of evidence might a tribunal look for in assessing this element? Early landmark rulings in other jurisdictions have considered the content of press releases, official announcements, statements by official representatives, regulatory submissions, and corporate disclosures.

Next, such assertions must be found either unsubstantiated or unsupported by facts. On this front, the interplay between regulatory standards, industry practices, and scientific rigor is critical to the analysis. While the connection between the development’s denudation and massive flooding is easy to draw, the Department of Environment and Natural Resources has deployed a technical team to assess The Rise’s compliance with environmental standards and implementation of mitigation strategies, the findings of which may be informative (but not conclusive) under a greenwashing claim.

However, given rampant corruption, tribunals must avoid the cop out of merely pointing to the prior issuance of a license, permit, or certificate greenlighting a project to dismiss a greenwashing claim. In short, such go-signals should not negate a finding of greenwashing if corporate behavior has proven subpar on ESG standards. The unavailability of such a defense is a critical aspect that must be addressed in any proposed greenwashing legislation. Notably, even as early as 2023, several experts, including University of the Philippines professor and civil engineer Joshua Agar, had already raised technical concerns about the project’s design.

Claims of “sustainability” cannot magically repel typhoons nor shield from floods, much less bring back lives and livelihoods ravaged by calamity. But a greenwashing law will, at least, prevent the semantic perversion of climate-related obligations, restore gravitas to ESG-related claims, and push businesses to back up such claims by exercising duties of care lest they be held accountable.

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Jose Marella is a lawyer who advises on sustainable commerce, and teaches law at the University of the Philippines and the Asian Institute of Management.