European financial regulators issued a call Tuesday for stakeholders to help them better understand greenwashing features, drivers and risks, and to identify potential greenwashing practices.

The call for evidence came from the European Union’s European Supervisory Authorities, consisting of the European Banking Authority and European Securities and Markets Authority in Paris and the European Insurance and Occupational Pensions Authority in Frankfurt.

In the statement, the ESAs cited “rapidly evolving regulatory regimes” as well as growing demand for sustainability-related products and “the need to better understand which areas may become more prone to greenwashing risks” as the reason for the call.

Financial institutions covered by the regulators and other stakeholders are encouraged to participate in an ESA survey designed to collect inputs, which closes Jan. 23, 2023.

The EU asked the three authorities to conduct the survey as it continues to develop a sustainable finance framework, including legislation being negotiated that will “substantially increase transparency and require the substantiation of sustainability claims in the financial market,” the EU mandate said.

While existing EU policies including the Sustainable Finance Disclosure Regulation and a green taxonomy provide the basis for defining greenwashing and unfair green claims, “further investigation and a common understanding of the specific features and ways greenwashing can materialize in the financial market is needed,” the EU mandate said.

“The effectiveness of sustainable finance policies depends on an adequate level of supervision and enforcement across the EU” throughout the investment chain and product life cycle, the mandate said.

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