The European Commission has published a call for advice addressed to the European Supervisory Authorities on the monitoring and supervision of "greenwashing" across the EU. Greenwashing can broadly be understood as the misleading marketing of a company or product as being environmentally friendly or sustainable, when that is not (or not substantially) the case. The EU has introduced legislation to preserve the reliability and transparency of ESG disclosures, including the Taxonomy Regulation and Sustainable Finance Disclosure Regulation. However, the Commission considers it important to continue monitoring greenwashing risks and assess the effectiveness of supervisory activities.
The Commission has asked the ESAs (the European Banking Authority, European Securities and Markets Authority and European Insurance and Occupational Pensions Authority) to agree on the common features of greenwashing. It also asks the ESAs to:
- determine the prevalence of and potential for greenwashing across the EU;
- provide an overview of the action that EU member states are taking, or could take, to tackle greenwashing using existing and proposed supervisory tools and powers;
- assess the state of implementation of EU sustainable finance policies in EU member states;
- assess whether the existing and upcoming supervisory mandates available to national regulators are sufficient to manage greenwashing risks; and
- propose any improvements that could be made to the EU legislative framework.
The ESAs will investigate and produce individual reports on greenwashing relating to their particular sectors of competence, although they are expected to coordinate to ensure comparability across sectors. The European Commission has requested the ESAs' progress reports to be delivered 12 months from the date the request is sent (i.e., by August 15, 2023), with final reports to be published a year after that.