EU watchdogs said in progress reports on Thursday to combat greenwashing that banks, insurers, and financial businesses around the European Union have made "misleading claims" about their sustainable credentials to investors.
The European Commission requested EU banking, insurance, and securities watchdogs to investigate greenwashing as investors poured billions of euros into funds that boasted of their environmental, social, and governance (ESG) advantages.
"The assessment confirmed that misleading claims may relate to all key aspects of the sustainability profile of a product or an entity such as ESG governance and resources," the European Securities and Markets Authority (ESMA) said in its report.
"Cherry-picking, omission, ambiguity, empty claims (including exaggeration), misleading use of ESG terminology such as naming and irrelevance, are seen as the most widespread misleading qualities," ESMA said.
Analysis of greenwashing in the EU since 2012, according to the European Banking Authority (EBA), shows a definite rise in the overall number of potential instances in all industries, including EU banks.
"The analysis of examples of greenwashing in the EU banking sector indicates that a bank can potentially engage in greenwashing in multiple ways, mostly at entity level, while greenwashing seems rather limited at product level except in the case of investment products," the EBA said.
As it completes mandated ESG reports for businesses, the EU is already taking action against greenwashing. Asset managers are already required to abide by ESG disclosure laws.
"Greenwashing has a substantial impact on insurance and pension consumers," said the European Insurance and Occupational Pensions Authority (EIOPA).
In May 2024, the EBA, ESMA, and EIOPA will release their final assessments on greenwashing and make suggestions for potential modifications to EU regulations.
(Source:www.alarabiya.net)
The European Commission requested EU banking, insurance, and securities watchdogs to investigate greenwashing as investors poured billions of euros into funds that boasted of their environmental, social, and governance (ESG) advantages.
"The assessment confirmed that misleading claims may relate to all key aspects of the sustainability profile of a product or an entity such as ESG governance and resources," the European Securities and Markets Authority (ESMA) said in its report.
"Cherry-picking, omission, ambiguity, empty claims (including exaggeration), misleading use of ESG terminology such as naming and irrelevance, are seen as the most widespread misleading qualities," ESMA said.
Analysis of greenwashing in the EU since 2012, according to the European Banking Authority (EBA), shows a definite rise in the overall number of potential instances in all industries, including EU banks.
"The analysis of examples of greenwashing in the EU banking sector indicates that a bank can potentially engage in greenwashing in multiple ways, mostly at entity level, while greenwashing seems rather limited at product level except in the case of investment products," the EBA said.
As it completes mandated ESG reports for businesses, the EU is already taking action against greenwashing. Asset managers are already required to abide by ESG disclosure laws.
"Greenwashing has a substantial impact on insurance and pension consumers," said the European Insurance and Occupational Pensions Authority (EIOPA).
In May 2024, the EBA, ESMA, and EIOPA will release their final assessments on greenwashing and make suggestions for potential modifications to EU regulations.
(Source:www.alarabiya.net)
