Greenwashing in Financial Services: How to Make ESG Claims That Hold Up

By Yamm Labs · Updated October 2026 · 13 min read

The storyboard for an ESG fund launch reaches the compliance reviewer on a Thursday afternoon. Frame one shows a sapling pushing up through a pile of coins, and the super reads “Grow your money, grow a greener India.” The reviewer skips the sapling and asks three things: which of SEBI’s ESG strategies the scheme follows, what part of the portfolio the line describes, and which document proves it. Nobody on the creative side knows. That gap, between what a piece of creative implies and what the product documents can prove, is where greenwashing in financial services usually begins.

What is greenwashing in financial services for a bank, AMC or insurer?

Greenwashing is a claim that makes a product, service or firm look better for the environment than the evidence shows. The Advertising Standards Council of India (ASCI) defines it, in green-claims guidelines that took effect in February 2024, as unsubstantiated, false or misleading environmental claims, including claims that omit or hide information. The Reserve Bank of India (RBI) uses a narrower version in its green deposit framework of April 2023: marketing a product as green when it does not meet the framework’s requirements.

In a financial brand the claim rarely sits on a label. It turns up in five places:

• A fund’s name and its new fund offer (NFO) creative, where words such as ESG, sustainable and green carry regulatory meaning.
• Green deposits, electric vehicle loans and green home loans, where the claim depends on where the money goes.
• Insurance sold as green because the policy is paperless, or because a share of premium funds tree planting.
• Brand campaigns about the firm’s own net-zero target or solar-powered branches.
• Social posts, creator content and partner creative, which repeat the claim with less care than the original.

ESG also covers social and governance claims. Lines such as “empowering women borrowers” or “responsible lending” are ESG claims in the same sense and need the same evidence. This guide concentrates on environmental claims, because that is where Indian and global rules are most developed. The method carries over to the other two letters.

Why ESG claims carry more risk for a regulated financial brand

A regulated brand’s green claim gets read twice: once against the advertising code and once against the product rules behind the words. A soap brand that says “eco-friendly” answers to ASCI. An asset management company (AMC) that says “sustainable” also answers to the Securities and Exchange Board of India (SEBI), because the scheme’s name, portfolio and disclosures are regulated.

SEBI’s rules for ESG mutual fund schemes, now consolidated in its Master Circular for Mutual Funds (March 2026), are specific. An ESG scheme sits in its own sub-category of thematic equity funds and must follow one of six named strategies, such as exclusion, integration or transition. At least 80% of its assets must be in equity aligned with that strategy, and the rest must not contradict it. At least 65% of assets must be in companies that file a full Business Responsibility and Sustainability Report (BRSR) and get assurance on its core disclosures. The scheme name must carry the strategy, in the form “ESG Exclusionary Strategy Fund”.

The part marketers tend to miss is the audit trail. SEBI requires an AMC to obtain independent reasonable assurance every year that an ESG scheme’s portfolio matches its stated strategy. The AMC’s board must also certify compliance after an internal ESG audit that checks whether statements in the scheme documents are factual. A tagline that promises more than those documents say is a line someone will hold up against them.

Banks and deposit-taking NBFCs (non-banking financial companies) face the same logic. Under RBI’s framework for green deposits, money raised as green deposits must go to eligible green activities, an independent third party must verify the allocation every year, and the board-approved financing framework must be published on the lender’s website. RBI has since folded many of its circulars into entity-wise Master Directions, so check the current text. A “your deposit powers solar farms” campaign is only as true as the latest allocation report.

Insurers have a distribution problem. Under the Insurance Regulatory and Development Authority of India’s (IRDAI) 2024 regulations on policyholder protection and insurer operations, advertisements issued through distribution channels need the insurer’s written approval before they go out. A bank partner’s post about a “green term plan” is still the insurer’s claim, and the insurer signs it off.

In the Gulf, the Central Bank of the UAE’s Consumer Protection Standards require a licensed institution’s advertising to be accurate, understandable and not misleading, with key information shown prominently. The DIFC and ADGM free zones each have their own financial regulator. A claim that has to run in Mumbai and Dubai needs both reviews planned before production, because two regulators will read the same thirty seconds.

The UK and EU have gone further. The Financial Conduct Authority’s (FCA) anti-greenwashing rule took effect on 31 May 2024 for all authorised firms: sustainability claims about products and services must be fair, clear and not misleading. Guidelines from the European Securities and Markets Authority (ESMA) on fund names require funds that use environmental, impact or sustainability terms in their names to meet an 80% threshold of investments with those characteristics and to apply exclusion lists taken from EU climate benchmark rules.

Demand explains why the rules exist. The FCA’s guidance on the anti-greenwashing rule (April 2024) cites its Financial Lives Survey 2022, in which 74% of UK adults surveyed agreed that environmental issues are really important to them. We could not find an equivalent figure published by an Indian regulator, so we will not guess one.

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How a defensible ESG claim works, in five parts

A green claim that survives review has five parts. Miss one and the claim fails, however good the product is. We call the set the ESG claim file, because each part leaves a document behind that someone can check later.

• Scope. What the claim covers: the firm, one product, part of a portfolio or the packaging of a welcome kit. ASCI’s guidelines ask a claim to say whether it refers to the product, its packaging, a service or a portion of one, unless the context makes that obvious. “Paperless policy issuance” is scoped. “A greener way to insure” is not.
• Evidence. A document compliance can open on the day the ad goes live: the scheme information document, a monthly portfolio statement, a green deposit allocation report, an assurance statement or a recognised accreditation. The FCA’s guidance expects claims to be capable of substantiation at the point they are made, which rules out evidence that is still being prepared.
• Words. Absolute words such as eco-friendly, sustainable or planet friendly imply the whole product has no harmful impact. ASCI requires strong data or credible accreditation for them and says a disclaimer, QR code or website link cannot dilute them. Comparative words such as greener need the basis of the comparison made clear.
• Visuals. Leaves, rainforests, green gradients and globe icons make claims of their own. ASCI’s guidelines cover visual elements that leave a false impression when the ad is seen as a whole. The FCA’s guidance describes a bank that puts a rainforest image above its full list of savings accounts when only one account funds green projects, and says the image belongs next to that one account.
• Time. A target is a claim about the future. ASCI asks advertisers to avoid aspirational environmental claims unless they have clear, actionable plans, and to disclose clearly when a carbon offset will not happen within the next two years.

Here is how the parts change a real asset. Take a hypothetical AMC launching an ESG exclusionary strategy fund with a vertical video for Instagram and YouTube Shorts. Three decisions follow from the rules before anyone storyboards:

1. The full scheme name, strategy included, goes into the end-frame lockup. SEBI requires the strategy in the name, so the lockup is designed to hold a long name on a narrow screen, and nobody shortens it to “ESG Fund” to save space.
2. SEBI’s standard mutual fund warning gets its own frame, so the voice-over script is written to finish before that frame starts.
3. The sapling goes. An exclusion strategy screens companies out of the portfolio; it plants nothing. The visual shows what the strategy does, such as a sector grid with the excluded sectors greyed out.

The same thinking applies to a bank. If the green deposit page leads with an absolute headline and puts the allocation report behind a QR code, ASCI’s position is that the link does not rescue the headline. The decision is to rewrite the headline as a scoped claim and place the link to the financing framework one tap from it. We cover how fund films are structured in our 100 questions on financial explainer videos.

How to start an ESG claims review in your marketing team

Start with what is already live. In a financial brand, most of the greenwashing risk sits in old assets that nobody has looked at since launch, not in the campaign currently on the desk.

1. Pull every live use of green, ESG, sustainable, climate, net zero and responsible from the website, app screens, NFO decks, branch posters, social channels and partner creative. Include images and colour treatments, not only copy.
2. Open a claims register with five columns: the claim as written, its scope, the evidence document, the person who can confirm it, and a review date.
3. Sort each claim into the table above. Absolute and visual-only claims go to the top of the fix list.
4. Rewrite absolute claims as scoped ones and ask the product owner to confirm each rewrite against the evidence document.
5. Agree a sign-off route with compliance: who checks the evidence, who checks the words, and how many working days each step takes.
6. Add a claims field to the creative brief, so every new ESG asset arrives with its evidence attached.

Then send your compliance head a note that can go on file. For example: “We have listed every live ESG claim with its scope, evidence document and owner. Absolute claims have been rewritten or removed. New ESG assets will carry a claims field in the brief. We will review the register every quarter, and whenever a scheme document or allocation report changes.” This is general guidance, not legal advice; your compliance team decides.

If you want a second pair of eyes on the review itself, our compliance and creative page explains how we build regulator checks into the creative process.

How to measure whether your ESG claims hold up

No metric proves a claim is lawful. That judgement belongs to your compliance team and, in the end, to the regulator. What you can measure is whether the system that produces claims is working. Four measures cover it:

• Evidence coverage. Live ESG claims with a named evidence document, divided by all live ESG claims. Anything short of full coverage is a fix list.
• Absolute-claim count. Live claims that use unqualified words such as eco-friendly or sustainable, outside a regulated scheme name. The target is zero.
• Review rounds per ESG asset. Total compliance rounds divided by ESG assets approved. A rising number usually means copy is being written before the evidence is found.
• Register freshness. Claims past their review date, divided by all claims in the register. It shows whether the register still matches the latest scheme documents and allocation reports.

Alongside these, log every ASCI complaint, regulator query and customer question about a green claim against the claim it concerns. One query is a reason to check every asset that repeats the same line. For the wider advertising rules a mutual fund has to follow, our SEBI advertising rules FAQ covers the common questions.

A green claim is only as true as the document behind it on the day the ad runs.

What goes wrong with ESG marketing, and the early signs

Most ESG marketing failures are drift. A claim starts accurate and ages badly, because products, portfolios and allocations change faster than creative gets reviewed. The table lists the failures we see most often, the signal that shows up first, and the fix.

The second failure is the easiest to prevent and the most common in social content. A long, strategy-bearing scheme name feels clumsy in a caption, so it gets trimmed. The trimmed name is no longer the regulated name, and the caption now describes a product that does not exist. Build the full name into templates before the first post, and the problem never starts.

Watch for one more early sign: the word “sustainable” appearing in a brief before anyone has asked what is being sustained. When a brief uses ESG words as mood, the creative will too. Ask the brief writer to replace each green adjective with the fact it stands for, and see what is left.

When an ESG campaign is the wrong choice for a financial brand

Sometimes the right ESG claim is no claim at all. Choose silence, or a narrower product message, in any of these situations:

• The product has no feature that changes where the money goes or what it funds. Paperless onboarding is an operations fact, not a reason to call a personal loan green.
• The evidence is not published yet, such as a green deposit programme before its first third-party verification.
• The firm’s wider lending or investment book contradicts the headline, in a way a journalist could find in the annual report.
• The campaign has to run in several markets and you cannot get each market’s review done in time.

Choose an ESG claim when the product has a regulated label or a published framework behind it, the evidence is current, the claim can be scoped to that product, and the product owner will put their name against the register entry. In that case the claim is an asset. The scoped version also tends to be the stronger line, because specific claims are easier to believe.

There is a risk on the other side too. A firm that goes quiet about features it can prove leaves customers who care about them without the information they want. The answer to greenwashing is a smaller claim that you can prove, and a file that shows the proof.

People also ask

Is greenwashing illegal for financial firms in India?

ASCI’s guidelines treat greenwashing as misleading advertising under its code, and they have applied since February 2024. For regulated products, SEBI, RBI and IRDAI rules sit on top, so a fund’s ESG name or a bank’s green deposit claim must also match the product rules. Your compliance team decides whether a specific claim crosses the line.

Can an Indian mutual fund call a scheme sustainable?

Under SEBI’s rules, ESG schemes sit in a thematic sub-category and must follow one of six named strategies, with the strategy shown in the scheme name. At least 80% of assets must follow that strategy. Use the scheme’s approved name in full, and avoid loose words such as sustainable that the name does not carry.

Does a disclaimer fix an unproven green claim?

No. ASCI says absolute claims such as eco-friendly or sustainable cannot be diluted by a disclaimer, a QR code or a website link. Rewrite the headline as a specific claim about what the product does, and keep the evidence on file.

Do the FCA and ESMA greenwashing rules apply to Indian firms?

The FCA rule applies to firms authorised in the UK, and the ESMA guidelines to fund managers in the EU. An Indian firm with no UK or EU business sits outside them. They are still a useful benchmark, because they spell out what regulators expect a defensible sustainability claim to look like.