Overview
Greenwashing detection is critical in today's regulatory environment. With fines reaching USD 17.5 million for misleading sustainability claims, Verdex's AI-powered detection helps identify risks before they derail financing.
Greenwashing Risk
Can deduct 3-60 points from the LMA validation score based on red flags detected
Red Flag Patterns Detected
| Category | Red Flag | Risk Level |
|---|---|---|
| Vague Commitments | "Net zero by 2050" without interim targets | HIGH |
| Missing Scope 3 | Material sectors without value chain targets | HIGH |
| BAU Targets | KPIs below business-as-usual trajectory | MEDIUM |
| No Verification | No third-party verification plan | MEDIUM |
| Offset Heavy | >20% of reduction via carbon credits | MEDIUM |
| Lock-in Risk | New fossil fuel infrastructure with 20+ year life | HIGH |
| Missing Baseline | No emissions baseline data | HIGH |
Risk Scoring Matrix
7-10
HIGH RISK
DO NOT PROCEED without major remediation
- Multiple critical red flags
- No transition strategy
- Carbon lock-in evident
4-6
MEDIUM RISK
CONDITIONAL - address gaps before financing
- Some gaps in documentation
- Weak KPIs or verification
- Improvement path clear
0-3
LOW RISK
PROCEED with standard due diligence
- Strong transition credentials
- Third-party verification
- Science-based targets
⚠️Regulatory Context
With the EU ESG Ratings Transparency Regulation (July 2026) and FCA Anti-Greenwashing Rule (December 2024), greenwashing detection is no longer optional—it's a compliance requirement.