Europe’s three primary financial regulatory agencies, the European Supervisory Authorities (ESAs) announced today a Call for Evidence on greenwashing, aimed at gathering information on greenwashing risks and practices across the banking, insurance and financial markets sectors. The ESAs include The European Banking Authority (EBA), The European Insurance and Occupational Pensions Authority (EIOPA), and The European Securities and Markets Authority (ESMA).

The launch follows the request earlier this year by the European Commission for input from the ESAs on several aspects related to greenwashing and its related risks, and on the supervisory actions taken and challenges faced to address those risks.

The Commission’s request highlighted the rapid growth in demand for and offerings of sustainable investment products, and noted that while it views this growth as a “very positive trend,” it also raised the risk of greenwashing, warning that such practices could undermine trust in sustainable finance, and “the capacity of the financial system as a whole to channel private capital to sustainable investments.”

Regulators globally have been ramping up efforts to tackle greenwashing risks, including the EU’s own Sustainable Finance Disclosure Regulation (SFDR) framework, as well as recent product label and disclosure proposals by the U.S.’ SEC,  Australia’s recent anti-greenwashing guidance, and Singapore’s MAS’ new reporting and disclosure requirements for ESG funds.

The past several months have also seen several high-profile greenwashing-related actions by regulators and authorities, including a police raid into the offices of Deutsche Bank’s investment arm DWS on greenwashing allegations, and an SEC investigation into ESG-themed funds at Goldman Sachs.

While regulatory rules to target greenwashing are increasing, the Commission’s request highlighted the parallel need to monitor greenwashing, and that it is assessing whether current supervisory mandates are effective in addressing these risks. In its request, the EU Commission said:

“Greenwashing risks can arise in different parts of the financial market, including those not covered by sustainability rules and policies. The effectiveness of sustainable finance policies depends on an adequate level of supervision and enforcement across the EU.”

With its new call for evidence, the ESAs said that they are aiming to collect information from stakeholders on how to understand greenwashing and what the main drivers of greenwashing might be, examples of potential greenwashing practices across the EU financial sector, the scale of greenwashing, and the areas of high greenwashing risks.

The ESAs said that the information gathered from its call for evidence will be used for its progress report to the EU Commission, due May 2023, with a final report to be filed a year later.

In a statement announcing the launch of the call for evidence, the ESAs said:

“Obtaining a more granular understanding of greenwashing will help inform policy making and supervision and will help foster the reliability of sustainability-related claims.”

Click here to access the greenwashing survey.