The European Commission calls on the ESAs for input on greenwashing monitoring and supervision



With the noticeable rise of sustainable investments within the European Union[1], the concern for greenwashing is growing in the market.

In that context, the European Commission (the Commission) has recently requested each of the ESMA, EIOPA and the EBA (together referred as the ESAs) to provide input on various aspects related to greenwashing monitoring and supervision, notably on all associated risks and the implementation of sustainable finance policies intended to prevent greenwashing.

While the Commission has reasserted in its report request (the Request) the increasing importance of sustainable investments in the financial market and the numerous initiatives around it at European Union level, it has also warned against greenwashing, which can trigger financial and reputational risks, and also decrease the investors’ trust in sustainable financial investments.

Scope of the Request

The ESAs’ input should be composed of both an intermediary progress report focusing on the work undertaken to date (due 12 months after the Request), as well as a final report due 24 months after the Request. Considering the cross-sectoral nature of greenwashing, the ESAs are encouraged to act individually but in a coordinated manner, while reaching out to competent authorities when appropriate and sharing among themselves information and data collected on greenwashing-related cases and complaints, with a view to guarantee the overall coherence across the different reports. Moreover, to the extent possible, the ESAs shall use a common terminology on greenwashing across the sectors and highlight the sectoral deviations from the common concepts.

The Commission has highlighted the following items to be included the ESAs’ input:

  1. the scale of the occurrence of greenwashing and identification of the most common greenwashing cases and complaints;
  2. all associated risks to financial markets, financial sector entities, investors and consumers, including their potential emergence, the chance that these materialize, their transmission channels and likely impact on the financial markets and solvency of financial institutions;
  3. the supervisory practices developed by competent authorities against greenwashing and their potential gaps;
  4. the current state of implementation and application of sustainability-related national legislation and EU policies aiming at the prevention of greenwashing or addressing greenwashing risks, including an assessment of how the competent authorities are currently implementing or will implement supervisory under the SFDR[2] and Taxonomy Regulation[3].
  5. measures to identify, prevent, investigate, sanction and remediate greenwashing in the financial markets by competent authorities;
  6. an assessment as to whether the current supervisory mandates of competent authorities are sufficient to address greenwashing and associated risks; and
  7. any proposal for improvement of the current regulatory framework.


Although greenwashing is a current concern, the Commission gave a fairly long timeframe for the ESAs to give their feedbacks. While the Request covers a wide variety of greenwashing-related topics, it is currently quite difficult to predict the outcome of the ESAs’ reports, noting the rather vague nature of the Request which gives them some latitude and flexibility regarding the form and content of the reports.

[1] In the end of December 2021, assets in Article 8 and Article 9 SFDR funds reached EUR 4.05 trillion according to Morningstar latest study on “SFDR Article 8 and Article 9 Funds: 2021 in Review”

[2] Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector, PE/87/2019/REV/1.

[3] Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088, PE/20/2020/INIT.