European Financial Watchdogs to Collect Greenwashing Examples for Better Understanding

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European Financial Watchdogs to Collect Greenwashing Examples for Better Understanding

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The three European Supervisory Authorities (ESAs), namely the European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), and European Securities and Markets Authority (ESMA), published a Call for Evidence on greenwashing to better understand the conduct, as reported by Reuters on November 15. Specifically, ESAs will solicit opinions from stakeholders on how to understand greenwashing and what the main drivers of greenwashing might be, examples of potential greenwashing practices, the scale of greenwashing, and the areas of high greenwashing risks. Information collected from the study will be compiled in ESAs’ progress report to be submitted to the EU Commission in May 2023, with the final report to be filed a year later. 

Obtaining a more detailed understanding of greenwashing will help inform policymaking and market supervision and improve the reliability of sustainability-related claims, ESAs explained. According to the EU Commission, sustainable investment products are growing rapidly, along with the risk of greenwashing. The Commission warned that the risk could threaten trust in sustainable finance and the capacity of the whole financial system to attract sustainable investments. In June 2022, the US Securities and Exchange Commission (SEC) launched a probe into Goldman Sachs [GS:US] for possibly exaggerating its environmental, social, and governance (ESG) criteria for some mutual funds, sending a strong message to the financial sector that the anti-greenwashing campaign has begun. In late October, Australia’s corporate watchdog Australian Securities and Investments Commission (ASIC) also issued its first penalty for greenwashing, fining Tlou Energy [TLOU:LN] USD34,600 over misleading statements on the emission of its electricity.  

Sources:

https://www.reuters.com/business/sustainable-business/eu-financial-watchdog-launch-fact-finding-dive-into-greenwashing-2022-11-15/

https://www.eba.europa.eu/esas-launch-joint-call-evidence-greenwashing

https://www.esgtoday.com/european-regulators-launch-greenwashing-study/

https://www.reuters.com/business/us-sec-investigating-goldman-sachs-over-esg-funds-wsj-2022-06-10/

https://www.reuters.com/business/environment/australian-regulator-slaps-first-greenwashing-fine-energy-firm-2022-10-27/

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