IOSCO Highlights Barriers to Action Against Greenwashing

The International Organization of Securities Commissions (IOSCO) has published a final report on supervisory practices to address greenwashing, leveraging its members’ experience from initiatives taken in their own jurisdictions. The report highlights challenges hindering the implementation of IOSCO’s recommendations, including data gaps, transparency, quality, and reliability of ESG ratings, consistency in labelling and classification of sustainability-related products, and evolving regulatory approaches. IOSCO said that while some of these challenges are currently being addressed, greenwashing remains a fundamental market conduct concern that poses risks to both investor protection and market integrity. The report follows anti-greenwashing recommendations published by IOSCO in November 2021 and a call for action issued in November 2022. The report noted greenwashing can occur throughout the investment value chain, and any market participant – from issuers to asset managers to ESG ratings and data products providers – can engage in this behaviour. It added this poses risks to investor protection and market integrity, undermines trust in sustainable finance, and hinders the availability of reliable and comparable sustainability-related information. IOSCO flagged that there is currently no global definition of greenwashing, and that other malpractices such as greenhushing and green-bleaching are also becoming prominent. The report also underscored the importance of capacity building activities, financial education initiatives, consistency of terminology, cross-border cooperation, and knowledge sharing to address greenwashing risks. 

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