Finance: Greenwashing Risk 2026
The financial sector sits at the intersection of two regulatory regimes: the EmpCo Directive (EU 2024/825), which tightens consumer-facing environmental claims across all industries, and the dedicated sustainable finance framework built around SFDR (Regulation (EU) 2019/2088) and the EU Taxonomy (Regulation (EU) 2020/852). Products marketed as "green funds" or "ESG-compliant" are a prime target for warning letters, because retail investors place heavy reliance on sustainability labels when making investment decisions. The BaFin proceedings against DWS in 2022/23 served as a wake-up call for the European asset management industry: inadequate ESG integration and misleading statements in sales materials can attract substantial supervisory sanctions. From 27 September 2026 the EmpCo Directive raises the bar further. Generic claims such as "sustainable investment" or "ESG-compliant" without concrete substantiation are prohibited under EmpCo Annex I No. 2 (UCPD as amended). The claim "climate-neutral" based on offsetting is per-se banned under Annex I No. 4a. Financial service providers must therefore align their marketing communications with transparent data, measurable criteria and recognised standards — SFDR classification, EU Taxonomy alignment percentages and GRI reporting serve as the primary substantiation framework. Clear separation of emissions reduction from offsetting, and full disclosure of the underlying ESG methodology and data sources, are essential to avoid enforcement action.
Typical claims in Finance
- „sustainable investment"
- „green fund"
- „ESG-compliant"
- „impact investing"
- „CO₂-neutral portfolio"
Concrete examples (red/amber)
- "Green fund" without transparent SFDR classification (Art. 8 / Art. 9)
- "ESG-compliant bonds" without disclosure of the ESG criteria and ratings applied
- "CO₂-neutral portfolio" through pure offsetting without documented reduction targets
EmpCo-compliant alternatives
Recommendations
- Comply with SFDR (Sustainable Finance Disclosure Regulation) disclosure obligations under Art. 8 and Art. 9
- Present ESG methodology and data sources transparently in marketing materials and pre-contractual documents
- Verify EU Taxonomy alignment of investments and disclose the percentage of taxonomy-aligned activities
- Avoid generic statements such as "sustainable" without concrete substantiation
- Clearly communicate any offsetting mechanisms used — distinguish them from actual emissions reduction
Recognised certificates
Relevant court rulings
Frequently asked questions
What do SFDR Art. 8 and Art. 9 mean in practice?
Art. 8 products ("light green") promote environmental or social characteristics alongside financial returns. Art. 9 products ("dark green") have a specific sustainable investment objective and invest exclusively in sustainable activities as defined by the EU Taxonomy. Both classifications must be disclosed transparently in pre-contractual documents and on the product webpage.
May I still advertise with "CO₂-neutral" for financial products?
No. Under EmpCo Annex I No. 4a (UCPD as amended, applicable from 27 September 2026), a "climate-neutral" claim based on CO₂ offsetting is per-se prohibited. Only the demonstrable reduction of the portfolio's carbon footprint — with transparent Scope 1, 2 and 3 data and a credible glide path — may be communicated.
What consequences are there for misleading ESG claims?
In addition to warning letters from competitors and consumer protection associations, financial service providers face fines from BaFin under supervisory law, potential SFDR enforcement by competent national authorities, and significant reputational damage. From 27 September 2026, private enforcement rights under the amended UWG implementing EmpCo Directive 2024/825 are further strengthened.