The European Union’s banking, securities and insurance watchdogs launched a joint public consultation on Tuesday (15 November) to help them better understand ‘greenwashing’ as billions of euros flow into investments that tout their sustainability credentials.
Greenwashing refers to companies or products exaggerating their sustainability claims to attract investors and the bloc is already rolling out mandatory disclosures for asset managers and companies.
“Growing demand for sustainability-related products combined with rapidly evolving regulatory regimes and sustainability-related product offerings create a context that may be conducive to increased greenwashing risks,” the watchdogs said in a joint statement.
Regulators typically issue a call for evidence before writing new rules. This one is being conducted jointly by the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA).
The three watchdogs are expected to issue final recommendations by the end of May 2024 to the EU’s executive body, the European Commission, which has powers to propose laws.
The watchdogs said they were looking for greenwashing evidence across the whole spectrum of claims related to the environment, social and governance (ESG) in relation to companies, products and services.
A more granular understanding of greenwashing “will help inform policy making and supervision and will help foster the reliability of sustainability-related claims,” the regulators add, saying the call for evidence is being launched on the basis of a mandate received by the European Commission in May 2022.
The European Union has reached a deal on corporate sustainability reporting requirements for large companies from 2024, the French EU Presidency announced on Tuesday (21 June).
[Edited by Frédéric Simon]
This content was originally published here.