Europe’s biggest regulators launch greenwashing study 

November 22, 2022

A major greenwashing study has been launched by three of Europe’s most powerful financial regulatory bodies. 

The study is currently built around a call for evidence aimed at gathering information about greenwashing risks and practices across banking, insurance, and financial markets. 

This has been joint-launched by the European Banking Authority (EBA), European Securities and Markets Authority (ESMA), and European Insurance and Occupational Pensions Authority (EIOPA). 

The study has been launched in the context of a mandate handed down by the European Commission in May 2022.  

Read Minerva's previous coverage on the EU:

https://www.old.manifest.co.uk/eu-to-crackdown-on-greenwashing-in-green-bonds/

In its call for evidence, the authorities recognise the term greenwashing is used “broadly” with market participants giving prominence to certain issues over others (i.e. prioritising environmental data at the expense of social information). 

This study is built around collecting data in three key areas: how greenwashing happens and what its drivers are, examples of greenwashing, and any data metrics that can be used to gain a scale of the issue in Europe. 

These regulators are seeking greater insight into greenwashing as sustainability-linked products are being increasingly launched.  

Insights are being sought from stakeholders including firms regulated by the three authorities, as well as retail investors, consumers’ associations, and academia.  

Misleading ESG and Sustainability disclosures have become an area of greater focus for regulators around the world. 

In June 2022, the Australian Securities and Investments Commission introduced a set of guidelines to prevent large funds from greenwashing. 

This included requiring issuers of products, such as superannuation fund trustees, to use clear labels in their disclosure and promotions.  

That same month, the Securities and Exchange Commission (SEC) published a proposal to help standardise disclosures from ESG funds.  

This 350-page document included a requirement for companies to ensure environmental information they provide to investors is accurate. 

And in July 2022, the United Nations established a new panel of experts aimed at reducing greenwashing of companies with net-zero commitments. 

The European regulators’ call for evidence is open until 10 January 2023, with progress reports due from each of the regulators in May of that year. Final reports can be expected in May 2024.