The ESAs launch a "Call for Evidence" on Greenwashing practices in Europe


Concurrently to the growth of ESG-focused investments and sustainability disclosure regulations in the European market, the risk of greenwashing increases and threatens the soundness and trust of the sustainable finance market.

In that context, the European Supervisory Authorities (ESAs) were individually mandated by the European Commission on 23 May 2022 to give their input on the trend of greenwashing practices within the EU and develop recommendations to address related issues (the Greenwashing Mandate). The ESAs should produce a coordinated report, which should inter alia cover:

  • A common understanding of key features of greenwashing;
  • An understanding of the scale of potential greenwashing and how to identify the risks and challenges;
  • An assessment of the supervisory capacity and experience dealing with greenwashing cases;
  • The current state of implementation of relevant sustainable finance or related European policies and legislation aiming at preventing or addressing greenwashing;
  • An assessment of whether the current supervisory mandates are sufficient to identify and investigate greenwashing practices.

On 15 November 2022, the ESAs launched a “call for evidence” (CfE) requesting input from relevant stakeholders in the context of their Greenwashing Mandate. Financial institutions, retail investors, consumers associations, NGOs or also academia may submit their input to the ESAs until 10 January 2023.

In the CfE, the ESAs remind that the term “greenwashing” is broadly used to include sustainability-related claims covering all of the aspects of ESG (i.e. environmental, social and governance) and is not strictly limited to misleading environmental-related claims.

The ESAs inquire greenwashing practices falling within and outside of the current European sustainable finance regulations. It means that greenwashing practices may be related to a misapplication of the EU sustainability disclosure regulations (such as SFDR, Taxonomy, CSRD, etc.) but may also relate to ESG awards, the marketing made around the product, or ESG ratings.

The ESAs further consider that “greenwashing” may be analysed through four dimensions:

  1. The role that the market participant plays in greenwashing (trigger, spreader, or receiver of the sustainability claims)
  2. The actual topic or level of the sustainability-related claims – i.e. claims at the level of the entity, claims at the level of the product and claims about the data and metrics used
  3. The misleading quality of the sustainability-related claims
  4. The channel through which the sustainability-related claims are communicated to others actors across the value chain.

The ESAs are looking for the views of the different stakeholders on their understanding of greenwashing and the main greenwashing drivers, concrete examples of greenwashing practices and available data.

The questionnaire is composed of a general question for the coordination input from the ESAs and specific sections depending on the European Supervisory Authority’s competence.

We are expecting this CfE to bring clarity on the trend of greenwashing currently threatening the European Union market. The aim of the report to be produced by the ESAs is to bring a common understanding of its risks and ways to prevent and address the greenwashing practices with an adequate approach.