For instance, banks and financial institutions claim to no longer fund coal or environmentally damaging plantations projects. However, in reality, they continue to secretly finance such businesses.

In Indonesia, although not readily apparent, there are ongoing financing projects that have the potential for greenwashing.

One example is the Carbon Capture Utilization and Storage (CCUS) development, which is being carried out by state-owned oil and gas company Pertamina in collaboration with Chevron and Exxon.

As reported earlier, Pertamina is currently seeking funding from the Just Energy Transition Partnership (JETP) in the form of a grant. The objective of the funding is to support research on accelerating CCUS implementation in the oil and gas upstream sector.

Risk of greenwashing increases

A report by Client Services Earth and the Asia Investor Group on Climate Change released in April mentioned that the risk of greenwashing is increasing in the financial sector.

Greenwashing potential products include green managed funds, green listed equity funds, green infrastructure funds, green private equity investments, sustainability-linked bonds, and green bonds.

"In the investment chain, there are two stages of greenwashing: those resulting from claims and information by companies that receive capital injections, and those that emerge from the financial institutions providing the capital," as stated in the report.

Preventing greenwashing

To prevent greenwashing, the European Union has implemented the Sustainable Finance Disclosure Regulation and the Corporate Sustainability Reporting Directive. In the United States, the Securities and Exchange Commission (SEC) has established the Climate and ESG Task Force.

Uncovering greenwashing practices is challenging in Asia. According to Sean Tseng, a legal consultant at Client Earth, there is a cultural barrier in Asia that hinders people from challenging or confronting suspected perpetrators of greenwashing. Projects in the region often involve influential figures or individuals with power.

Currently, several Asian countries such as China, Japan, Hong Kong, India, Singapore, Thailand, and the Philippines have ESG reporting standards. Indonesia does not yet have such standards. Only a green taxonomy introduced by the Financial Services Authority and a green index proposed by the Indonesia Stock Exchange exist. "The regulations are quite weak, with little progress in combating greenwashing in Indonesia," Tseng said.