Dirty Green Money is a pioneering interdisciplinary study of illicit ESG financial activity. Since the 2015 Paris Climate Accords there has been a surge in “ESG Investing”: financial investments which promise, among other things, to produce positive environmental and sustainability impacts. Between 2016 and 2021, global assets under management (AUM) in sustainable investing grew by at least 19% every year, far in excess of average growth in the wider asset management industry (Christophers, 2023; 2024). By 2020, $35.3 trillion of assets – more than a third of global AUM – were invested in accordance with ESG principles; and the number of exchange-traded funds labelled as “green” more than doubled between 2021 and 2023, now totalling almost 1300 (Sustainalytics, 2023).

The volume of ESG investment is often utilised as a barometer for progress toward net zero. However, significant concerns are emerging around the potential for and prevalence of fraud or “greenwashing” within this investment space, whereby banks, asset managers and other financial actors intentionally misrepresent the environmental credentials of particular investment opportunities. While attention to greenwashing has grown significantly over the past two decades, scholarly work has primarily focused on either the questionable environmental or sustainability claims of particular household products such as food, cosmetics, and automobiles; or on corporations’ use of greenwashing for PR purposes (Smith and Brisman, 2021). This research, by contrast, offers an interdisciplinary focus on greenwashing within financial markets – the beating heart of contemporary capitalism. It is a form of greenwashing with significantly larger and more wide-ranging financial and environmental harms, arguably constituting the more serious crime of securities fraud (Park, 2023). 

Regulators such as the Finance Conduct Authority have warned of the proliferation of greenwashers among self-labelled ESG funds, sustainability-linked loans, and carbon credit schemes, whose claims as to the environmental benefits of particular investment funds or projects are fraudulent and fail to bear scrutiny. Authorities have responded by establishing a globally aligned set of standards for organisations to report their impact on the global climate. However, there is significant scepticism around the robustness of these reporting standards, while the regulatory landscape is rapidly evolving and inconsistent, leaving significant gaps for exploitation. Furthermore, research into other areas of illicit finance – such as corruption, money laundering, and conventional forms of fraud – have found that such compliance and audit strategies are often highly ineffective and potentially even criminogenic themselves (Kuldova, 2022; Power, 1997; Shore and Wright, 2024; Sikka, 2015).

Dirty Green Money: ESG Fraud, Greenwashing and Compliance in the Drive for Net Zero aims to 1) establish a clear picture of the emerging regulatory landscape and the gaps available for exploitation; 2) identify the various methods and opportunities for greenwashing within this investment space; and 3) critically examine the established methods for policing and preventing this particular form of greenwashing. To achieve these aims, the methodology will triangulate a critical review of existing academic and grey literature; participant observation of ESG compliance methods and regulation; and interviews with anti-fraud activists, practitioners, and finance industry professionals.