The European Supervisory Authorities (ESAs), which bring together the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, have published progress reports on the investigation of greenwashing in the financial services sector (hereinafter – progress reports). These reports are aimed at combating the practice of greenwashing, when, for example, recipients of financial support from the EU made statements focused on nature-oriented and sustainable development issues, but in fact carried out activities without observing environmental standards.
ESAs defined greenwashing as a practice where 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 can be deceptive to consumers, investors or other market participants.
Progress reports identify areas of high risk in sectors of the relevant authorities that are prone to “green bleaching” and suggest preliminary measures to eliminate this phenomenon.
The purpose of their publication is to assist businesses and governments in preventing and reducing “greenwashing”, while supporting national authorities in prioritizing supervisory measures, control measures and improving regulations. ESAs work together in a coordinated way to solve these issues and achieve such results as consumer protection, development of the market for environmentally conscious entrepreneurship and services, creditors’ trust in financing sustainable development projects.
Although the ESAs did not specify the desired legal forms or timelines for possible changes in the EU regulatory framework, they are expected to publish their final greenwashing reports in May 2024. These reports will include final recommendations and guidelines for their implementation.
The progress reports respond to the European Commission’s request, published in May 2022, on greenwashing risks, control and oversight of sustainable development policies.
In general, these reports reflect relentless efforts to combat greenwashing in the funding provision sector and support truthfulness, transparency and accuracy in statements and actions related to sustainable development.
Full text of the reports on progress in greenwashing investigation in the financial services sector can be found at the following link: http://surl.li/olmlu.
