ESG and sustainability panels were amongst the best attended at this week’s Infrastructure Investor Network Global Summit in Berlin. As one attendee put it: “ESG stuff is always the most popular”.

Among the talking points were how the race to net zero at a portfolio level pushes investors away from the necessary task of decarbonising existing industry; and how to integrate biodiversity considerations into investment due diligence.

But perhaps most notable was the level of concern around greenwashing. In Monday’s opening panel, CIM Group’s Mike Hoverman declared it to be “the biggest challenge facing progress on ESG”: bigger than the anti-ESG backlash in the US that has managers trying to balance diverging investor views; bigger than the macroeconomic climate.

There are many reasons why greenwashing is worrisome. First and foremost is that the future of humankind rests on a timely transition to a net-zero economy: false progress on this front could be disastrous. At the investor level, LPs must be able to rely on the claims of their managers, both for the sake of trust and their own reporting obligations. GPs across the world now have to take care that their statements about their sustainability credentials are matched by action, lest they face litigation, regulatory action or reputational damage.

The advent of more comprehensive and standardised reporting – whether driven by regulators, limited partners or both – could well uncover a glut of greenwashing cases. As a result, some managers are in for a rough ride over the next couple of years. “We actually may see more examples of greenwashing [in the next few years], but it’s because we’ll have that transparency” as Aksia’s Afolabi Oliver, a panelist that the Summit, put it.

While the short-term impact may be to undermine faith in the investment industry to deliver on sustainability, the long-term result should be a more transparent, and more credible market. In Oliver’s words: “You’ll remove the blanket and you’ll see more.”