Date 04/06/2024
The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) today published their Final Reports on Greenwashing in the financial sector.
See ESMA, EBA, and EIOPA reports.
In their respective reports the ESAs reiterate the common high-level understanding of greenwashing as a practice whereby sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may be misleading to consumers, investors, or other market participants. The ESAs stress again that financial market players have a responsibility to provide sustainability information that is fair, clear, and not misleading.
Each ESA provides a stocktake of the current supervisory response to greenwashing risks under their remit and notes that national competent authorities (NCAs) are already taking steps in the area of supervision of sustainability-related claims. In addition, the ESAs provide a forward-looking view of how sustainability-related supervision can be gradually enhanced in coming years.
While the ESAs’ reports focus on the EU’s financial sector, they acknowledge that addressing greenwashing requires a global response, involving close cooperation among financial supervisors and the development of interoperable standards for sustainability disclosures.
The supervision of sustainability-related claims has become a priority for NCAs. NCAs and ESMA are taking steps to better monitor and detect greenwashing and to critically scrutinise sustainability-related claims in various sectors. Several Common Supervisory Actions have already been launched, with a view to ensure effective and consistent supervision. At the same time, NCAs still face constraints on their resources, as well as on their access to expertise and to good quality data.
ESMA Chair, Verena Ross, said:
Building on the progress already accomplished, and with the aim to gradually allow supervisors to reach their full potential in this area, ESMA indicates priority actions in order to enable supervisors to better mitigate greenwashing risks:
ESMA will continue monitoring greenwashing risks and supervisory progress, including via the ongoing Union Strategic Supervisory Priority on “ESG Disclosures”.
Building on the preliminary regulatory remediation actions identified in the Progress Report, ESMA will publish an Opinion with views on how the EU regulatory framework for sustainable finance could further facilitate the investors’ journey.
