10 October, 2025

Being accused of greenwashing has never been a good look, but the consequences for organisations just became far more serious.  

As of 1 September, the UK’s Failure to Prevent Fraud (FTPF) offence came into force under the Economic Crime and Corporate Transparency Act 2023. What was once primarily a regulatory or reputational issue (misleading sustainability claims flagged by watchdogs) can now lead to criminal liability. 

The new law introduces a ‘failure to prevent’ model, where companies meeting two of three criteria (more than 250 employees, more than £36 million turnover, or more than £18 million in total assets), can be held liable if an “associated person” (which could be an employee or agency acting on the company’s behalf) commits fraud that aims to benefit the company, unless the company can show it had reasonable fraud prevention procedures in place. The definition of fraud in the Act covers false representation, failure to disclose, and misleading statements by directors, all areas directly relevant to sustainability claims. 

For businesses, this could be a turning point, now greenwashing is no longer just a matter for the CMA, ASA, but can carry unlimited fines and/or criminal consequences. While it’s not clear whether prosecutions will be brought, or will succeed, it adds a new level of scrutiny to marketing claims. To manage risk, companies will need to build robust, integrated procedures by aligning legal, compliance, sustainability and communications teams, validating claims with evidence, and embedding integrity into every stage of reporting and marketing. 

We hope the legislation helps put sustainability where it belongs: at the heart of governance. In a world where trust is increasingly everything, proving your honesty may soon matter just as much as proving your impact. 

By Sirisha Venkatesh