RepRisk reported a 28% year-on-year increase in companies linked to greenwashing, reaching 1,594 entities in the year to June 2026. This marks the second consecutive annual rise, reversing a 12% decline recorded in 2024.

The data reveals a significant pivot in risk exposure. Scrutiny is moving away from traditional high-emitting industries toward sectors critical for the low-carbon transition. Between 2022 and 2026, the combined share of greenwashing linkages associated with Alternative Energy, Industrial Metals, Mining, Software and Computer Services, and Utilities rose from 18% to 29%. Conversely, the share linked to Oil and Gas fell from 17% to 12% over the same period.

Financial institutions remain central to risk

Financial Services and Banks together accounted for one-fifth of all sector linkages among greenwashing-linked companies in 2026. Financial Services emerged as the most exposed sector with 305 companies, reflecting a 40% year-on-year increase. Banks followed with 86 linked companies, a 23% rise. For these institutions, risk arises both from their own operations and from the projects and companies they finance or underwrite.

Biodiversity overtakes climate as primary issue

A notable shift occurred in the environmental issues driving greenwashing allegations. In 2026, linkages concerning ecosystems and biodiversity surpassed those related to climate change and emissions for the first time in five years. The number of biodiversity-related linkages nearly doubled from 162 in 2024 to 300 in 2026. Meanwhile, climate change and emissions linkages remained broadly flat, edging up slightly from 272 to 275.

What the numbers show

The divergence between the rapid growth of biodiversity linkages (+85% from 2024 to 2026) and the stagnation of climate-related linkages suggests that regulatory and public scrutiny is expanding beyond carbon metrics. While financial institutions saw significant increases in absolute numbers, the relative share of Oil and Gas declining while transition-linked sectors rise indicates that "green" investments are now facing stricter verification standards regarding their actual environmental impact, particularly concerning ecological footprints rather than just emissions profiles.

Financial institutions are facing a sharp escalation in artificial intelligence-related conduct risks, with the average cost of a major business conduct incident reaching USD 14 million. According to the Business Conduct Risk Intelligence Report 2026 released by RepRisk, 56% of C-suite executives now identify AI-related conduct risks as a top material risk for the next three years, a significant increase from 16% over the past three years. This shift ranks AI risks first among non-financial risks as banks, asset managers, and other financial firms integrate AI into core workflows such as due diligence, compliance, and portfolio oversight.

The analysis, conducted in collaboration with Oxford Economics and surveying more than 500 C-suite executives, indicates that major business conduct risk incidents rose by 55% between 2023 and 2025. Firms face an annual cost exposure of USD 28 million to USD 43 million from reputational and business conduct risks, typically experiencing two to three significant incidents per year. The most severe incidents average USD 37.6 million. Despite these rising costs, the majority of firms continue to invest in conduct data reactively rather than preventively.

Rising costs and complexity

As financial firms scale AI across risk workflows, the report emphasizes that trusted data is essential to maintain relevance, accuracy, and auditability. Flawed or inconsistent data entering AI-driven workflows can cause errors to propagate across models, dashboards, and portfolios, becoming difficult to reverse. The survey found that 67% of executives report overall risk complexity has increased over the past year.

Executives expect the return on investment from structured business conduct risk intelligence to double within three years. Modest improvements in monitoring, such as reducing incident frequency by 5% to 10% or accelerating escalation, could mitigate multi-million-dollar losses annually by reducing blind spots and strengthening governance.

Human-led AI preference

The survey points to a clear preference for human-led AI when business conduct risk data informs material decisions. Across the full sample, 73% of executives report using human-AI hybrid approaches. Furthermore, 67% trust hybrid data for material risk and investment decisions, compared with only 35% for AI-only approaches. This preference is more pronounced among banks, where 74% of respondents express confidence in human-AI hybrid data.

"AI is moving deeper into financial decision-making, but models are only as trustworthy as the data and guardrails behind them," said Philipp Aeby, CEO and Co-Founder of RepRisk. He emphasized that financial leaders seek the speed of AI without the risks of black-box automation, favoring trusted, AI-powered risk intelligence with humans in the lead.