Escalating Greenwashing Risks Emerge in the Financial Industry, According to European Regulators

New reports from Europe’s financial regulatory agencies identify a notable surge in the number of potential instances of greenwashing, defined by the European Supervisory Authorities as “a practice where sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services.” The report highlights areas of greenwashing risk, including misleading claims about sustainability impact, litigation risks stemming from ESG claims and misleading product claims. The European Securities and Market Authority observed a growing disparity between the increasing demand for ESG products and the limited availability of sustainable asset pools. This growing demand for sustainable investing poses risks of greenwashing within the financial sector. Read More.