Greenwashing Under the Microscope: Key Takeaways from the ESAs’ Final Report 

25th June 2024

The European Supervisory Authorities (the “ESAs”) have recently published final reports on greenwashing in the financial sector, dated June 4, 2024. This comprehensive analysis addresses the European Commission’s request from May 2022 and builds on earlier progress reports. Greenwashing is defined 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. This practice may be misleading to consumers, investors, or other market participants.” 

Key Takeaways from the ESMA Final Report 

The European Securities and Markets Authority’s final report (the “ESMA Final Report”) highlights several crucial points: 

  • Increased Scrutiny: National competent authorities (“NCAs”) across EU member states are expected to intensify their scrutiny of sustainability claims. This includes boosting human resources, expertise, and deploying supervisory technology (“SupTech”) tools. Currently, only a few NCAs use SupTech, but many are developing these capabilities. 
  • Human Supervision: While SupTech tools are invaluable, ESMA emphasizes that they should complement, not replace, human supervision and professional judgment regarding sustainability information. 
  • Risk-Based Approach: Investment firms are under increased scrutiny in high-risk areas such as ESG strategies, resources, and ESG-related metrics and targets. Sustainability claims are now considered a top supervisory risk. 
  • Enforcement: Although enforcement actions have been limited, NCAs prefer ongoing supervision and assisting market participants with new regulatory frameworks. Identifying infringements remains challenging due to ambiguous regulatory definitions. 
  • Detection of Greenwashing: Few instances of actual or potential greenwashing have been reported, likely due to factors such as low complaint levels, limited resources, and difficulty accessing quality data. Early successes in preventing greenwashing may also play a role. 

Next Steps and Recommendations 

ESMA will continue monitoring greenwashing risks and supervisory progress, potentially issuing additional guidance. They will also publish an Opinion on enhancing the EU regulatory framework for sustainable finance. 

Recommendations for Firms: 

  • Review Disclosures: Ensure that sustainability disclosures are fair, clear, and not misleading to mitigate greenwashing risks and be prepared for increased scrutiny. 

Navigate Greenwashing Regulations with Zeidler’s Marketing Material Review Tool (MMR-Tool) 

In response to the European Supervisory Authorities’ (ESAs) intensified focus on greenwashing, firms need robust tools to navigate increased regulatory scrutiny and ensure their sustainability disclosures are fair, clear, and not misleading. Our Marketing Material Review Tool (MMR-Tool) provides the necessary support to ensure compliance with over 30 global regulations. 

Why Choose Zeidler’s MMR-Tool? 

Our MMR-Tool is maintained by specialist lawyers and subject matter experts, including those in ESG and sustainable finance, who have years of experience in legal reviews. This ensures your sustainability claims meet regulatory standards and are not misleading. 

Key Features of the MMR-Tool: 

  • Consistency Check: Ensures marketing materials align with the fund prospectus or PRIIPs KID, preventing contradictions. 
  • Global Coverage: Complies with over 30 global rules and directives, including national gold-plating requirements, with continuous updates. 
  • Instant Results: Provides almost instant high-quality results, bypassing the typical 3-5 business days wait associated with traditional legal processes. 

See Our MMR-Tool In Action– Book a Demo Today 

How Zeidler Can Help 

If you have any questions or require support, the Zeidler ESG Team is here to help. Our global team of professionals stays current with the latest legal, regulatory, and compliance changes affecting the asset management industry. For more detailed and specific professional advice, don’t hesitate to get in touch with our ESG Team. 



Katrina Crampton