So-called 'green bleaching' activities should not be sanctioned, but merely monitored by regulators, an advisory group has said.
ESMA's advisory council is urging for restraint when dealing with 'green bleaching', which is asset and investment managers understating the green credentials of their products.
ESMA's Securities and Market Stakeholder Group (SMSG) was asked to come up with a 'holistic definition' of greenwashing and whether 'green bleaching' should be considered an issue from a regulatory point of view.
No sanctions
The SMSG laid out its point of view, cautioning against any specific sanctions that underplay the green credentials of investment products.
"While this can be considered misleading, the phenomenon is often the result of managers preferring to err on the side of caution to avoid being accused of greenwashing', the SMSG wrote.
Moreover, the body pointed out there is no legal requirement to disclose the 'level of sustainability', so not making any claims should not be seen as a 'misrepresentation and therefore not be sanctioned, the group argued.
