European Regulators Target Greenwashing


Share on facebook
Share on twitter
Share on linkedin


European regulators target greenwashing and rules around ESG data

French and Dutch financial market authorities (Authorite des Marches Financiers and Autoriteit Financiele Markten) propose a European regulatory framework for providers of sustainability-related services (SSP’s) that provide ESG ratings, methodologies and measurements. The purpose is to prevent misallocation of investments, greenwashing and to protect investors.

As the demand for ESG and sustainable products increase, investors and asset managers will need more reliable ESG data to support the shift towards greener economies.

The joint paper addresses:

  • Transparency on methodologies;
  • Management of conflicts of interest;
  • Internal control processes;
  • Enhanced dialogue with companies subject to sustainability ratings.



Oversight over Sustainability Service Providers

In order to ensure that investors are being offered ESG products accurately, the data upon which an assessment of the underlying investments is determined as being in compliance with the ESG parameters becomes critical to avoid incorrect classification of investments as being sustainable and ESG aligned. This emphasises the importance of ensuring data that will underpin the sector is reliable, and therefore sustainability service providers (SSPs) may also fall under supervision, as well as having visibility of the methodologies adopted by the SSP.

ESG Ratings lack uniformity & Greenwashing

The observations noted that ESG ratings lack uniformity presenting challenges in coordination of standards that will be critical in underpinning the allocation of investments. The lack of uniform data or methodology could lead to increased ‘greenwashing’ through incorrect classification and allocation of investments as having the ESG or sustainability features which may result in investment which may not meet the relevant criterion.


The Dutch and French financial market authorities in their joint paper made the following recommendations:

  1. Seek a European wide regulatory framework for ESG data, analysis and services;
  2. Provide greater transparency on methodologies, management of conflicts of interest;
  3. Meet requirements on internal controls and governance relating to the reliability and quality of the services provided and management of any conflicts of interest;
  4. SSPs to European companies are required to operate through an establishment located in the European Union and should be supervised by ESMA;
  5. That recommendations must be proportionate and encourage, not stifle, innovation.


The authorities recommend a new ad-hoc regulatory framework instead of extending an existing framework, such as the regulation of Credit Rating Agencies.

How can we help?

We have an entire division dedicated to ESG with expert knowledge of the impending EU Sustainable Finance Disclosure Regulation and with local knowledge of its implementation. Our Invest Check tool is tailored to meet your individual needs to ease collection of all key data to drive your ESG investment strategy and reduce the stress of remaining compliant with global requirements as they continue to evolve. Our service ticks all the boxes at both an entity and product level to keep you on track.

Our global team delivers a single-source solution from the Invest Check tool through to  the development of applicable policies and procedures, including remuneration policies, investment decision making processes/ product governance processes, disclosure policies and ongoing integration of sustainability risks into existing frameworks.

Contact us now to learn more about what we can offer you.


Share on facebook
Share on twitter
Share on linkedin

Get in touch with our team

Submit your query

Cookie control
This website uses cookies so that we can make your experience better. If you wish to change your cookie settings please refer to our Privacy Policy. Otherwise we will assume you’re OK to continue. Privacy Policy