What is greenwashing and how is it regulated in the EU?

**Greenwashing** is a practice in which sustainability-related claims **do not clearly and fairly reflect** the actual sustainability profile of a company, product or service and may thereby mislead investors or consumers. There is **no single anti-greenwashing law**: enforcement runs across the existing rulebook — the **SFDR, MiFID II, IDD, UCITS/AIFMD** and the **Unfair Commercial Practices Directive (2005/29/EC)** ^[1].

On **4 June 2024**, **EBA, EIOPA and ESMA** published their **final reports on greenwashing** and called for enhanced supervision and improved market practice. The authorities settled on a common high-level understanding: greenwashing occurs where sustainability-related claims do not clearly and fairly reflect the underlying profile — regardless of whether the conduct is intentional ^[2].

The topic took concrete shape with the **ESMA guidelines on fund names using ESG or sustainability-related terms** (May 2024). If a fund uses terms such as 'ESG', 'sustainable', 'transition', 'social' or 'impact' in its name, **at least 80%** of investments should serve the promoted characteristics or sustainable investment objectives — plus term-specific exclusions. The guidelines have applied since **21 November 2024**; for funds already in existence a transitional period ran until **21 May 2025** ^[3].

The guidelines are **soft law** (comply-or-explain under Art. 16 of the ESMA Regulation) but have largely been adopted by national supervisors. In practice: fund name, marketing material and SFDR disclosure must be consistent — and all three are moving, which is why continuous monitoring of ESA communications is essential.