Greenwashing and the misapplication of articles 8 and 9 of the Sustainable Finance Disclosure Regulation

Greenwashing refers to the practice of presenting financial products, or more in general investments, as if they had environmental or green or ESG characteristics when in fact they don’t. It is a case of mis-representation potentially leading to mis-selling of financial products which could harm those investors looking for sustainable or green investment opportunities. The complexity of the new European legal regime and the misuse of some provisions might end up giving rise to greenwashing practices despite the declared intention stated in the framework to contrast them. Greenwashing can be effectively tackled through closer coordination between ESMA and the national competent authorities, more efforts in terms of regulatory harmonisation among member states and the introduction of a clearer and possibly more demanding set of rules on the qualification of green and/or sustainable financial products.