ESMA releases greenwashing progress report 02 June 2023France Reporter: Lucy Carter
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ESMA has published a progress report on the state of greenwashing in financial markets. The publication is part of the European Supervisory Authorities’ (EBA, EIOPA and ESMA) efforts to ensure a high-level understanding of greenwashing across the financial industry.
ESMA’s report provides a shared reference point for market participants and regulators to understand and combat greenwashing. Particular risk areas in the sustainable investment value chain are highlighted in order to help the industry mitigate the issue.
The report states that greenwashing “is the report of multiple interrelated drivers” including a lack of sufficient data, difficulty implementing governance processes and tools and the pressures of a fast-moving regulatory framework.
Initial actions that can be taken to remediate greenwashing risks are an understanding of sustainability disclosures that need to be made to retail investors, the creation of a “reliable and well-designed labelling scheme” and a more mature regulatory framework, ESMA says. Firms must ensure that they are fulfilling the claims they have made about their operations, and need to “communicate on sustainability in a balanced manner”.
The ESAs will publish their final greenwashing reports in May 2024, including recommendations and suggested potential changes to the EU regulatory framework.
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