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ESAs work on greenwashing should note the difference between misleading with intent and regulatory uncertainty

Sustainable Finance
16 January 2023 | Press Release
Sustainable Finance
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In an environment with unclear definitions at EU level on key sustainable finance concepts, as well as a lack of complete, comparable and transparent ESG data, all market actors are concerned about the risk of greenwashing. In our response to the European Supervisory Authorities’ recent consultation on this, EFAMA stresses that the core attributes of greenwashing need to be understood to address misleading practices, and thereby strengthen the integrity and effectiveness of EU capital markets.


We highlight that greenwashing assessments should consist of two components:

  1. knowingly misrepresenting sustainability-related practices or features of a product
  2. with the objective or intention to mislead or induce the receiver of the sustainability claim

Where there is no intention to mislead or induce the receiver of the sustainability claim, there may still be greenwashing in cases of gross negligence on the financial market participants making the claim.


Significant areas of financial institution supervision already address numerous greenwashing aspects, therefore any current regulatory gaps should first be identified before proposing new legislation or guidance.

We also emphasise the need for an aligned and consistent approach when addressing greenwashing risks in the financial sector, across Europe and internationally, in order to reduce confusion and the risk of harmful market fragmentation. 


Anyve Arakelijan, Regulatory Policy Adviser at EFAMA, stated “Intentionally misleading behaviour relating to sustainable investments should not be tolerated, in the same way that other misleading practices regarding risk or performance are not tolerated. However, considering the current degree of regulatory uncertainty and ongoing evolution, we must be careful to not apply the term greenwashing too broadly. Strengthening the understanding of what constitutes greenwashing and having harmonised supervisory action to address this risk is crucial. Otherwise investor confidence in sustainable finance could be severely undermined, threatening efforts to transition to a more sustainable economy.”





Notes to editors


You can read our full position paper here.


You can find additional information on the ESAs greenwashing consultation here.


For further information, please contact:


Hayley McEwen

Head of communication & membership development

Tel: +32 2 548 26 52


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