Financial regulators across the EU, UK, and the U.S. are stepping up enforcement against companies accused of greenwashing — the act of exaggerating or falsifying sustainability claims to appeal to investors. The European Securities and Markets Authority (ESMA) recently announced plans to audit ESG-labeled funds and assess whether their investments truly match their stated environmental and social goals. Similar actions are underway by the U.S. SEC and UK’s FCA. Authorities are warning that misleading ESG claims can constitute investor fraud, and enforcement is expected to increase throughout 2025.

This marks a turning point in ESG accountability. Asset managers and companies will need to ensure their disclosures are consistent, data-backed, and aligned with evolving reporting standards like those from the ISSB or CSRD. Greenwashing is no longer a PR concern — it’s a regulatory risk. Financial institutions must embed transparency into their entire ESG process, from product development to marketing.

Reference: ESMA. (2025, March). Sustainable Finance Roadmap 2025–2028. Retrieved from: https://www.esma.europa.eu