EU watchdogs highlight greenwashing across financial sector

Written by Adam Cadle

02/06/2023

Insurers, banks, and investment firms across the EU have made "misleading claims" about their sustainability credentials to investors, EU watchdogs said in progress reports on Thursday to crack down on greenwashing.

EU insurance, banking, and securities watchdogs were asked by the EC investigate greenwashing as investors put billions of euros into funds that tout their ESG attractions.

"The assessment confirmed that misleading claims may relate to all key aspects of the sustainability profile of a product or an entity such as ESG governance and resources," the European Securities and Markets Authority (ESMA) said in its report.

"Cherry-picking, omission, ambiguity, empty claims (including exaggeration), misleading use of ESG terminology such as naming and irrelevance, are seen as the most widespread misleading qualities," ESMA said.

The European Banking Authority (EBA) said analysis of greenwashing in the EU since 2012 shows a clear increase in the total number of potential cases across all sectors.

"Greenwashing has a substantial impact on insurance and pension consumers," EIOPA added.

EBA, ESMA and EIOPA will publish final reports on greenwashing in May 2024 and propose recommendations on possible changes to EU rules.

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