(Reuters) — Market watchdogs across the European Union have punished few instances of “greenwashing” by financial companies, partly because regulators don’t have enough resources to use their powers, the EU’s securities regulator said Tuesday.
Billions of euros have flowed into investments and companies that tout their green credentials, raising concerns among regulators about greenwashing, or exaggerated climate-friendly claims.
The European Securities and Markets Authority said local regulators — known as national competent authorities, or NCAs — that monitor day-to-day compliance with EU rules have reported only a limited number of actual or potential occurrences of greenwashing.
“Formal enforcement decisions are, up to now, limited as well,” ESMA said in a statement, adding that this is partly due to NCAs facing constraints on their resources and access to expertise and quality data.
ESMA and local regulators have begun to build up their capacity to deal with greenwashing, such as by improved training of staff. “Most NCAs consider, however, that their resources are not sufficient,” ESMA said.
The European Banking Authority and the European Insurance and Occupational Pensions Authority also issued reports on greenwashing on Tuesday in their respective sectors.
EBA said the number of alleged greenwashing cases in the EU rose by 26% in 2023 from 2022, driven by more communications and products linked to sustainability, adding that external checks of these instances could help banks and others with compliance.
