Croatia does not have an explicit legal framework to identify, address and sanction greenwashing in the financial sector. However, general rules governing investor protection, consumer protection and prohibition of misleading advertising may apply to greenwashing. For example, under the Capital Market Act, the investment company is obliged to act in the investors' best interest, correctly and following the rules of the profession. Moreover, UCITS and AIF managers are also obliged to act in the investor's best interest. However, we are not aware of cases where the Croatian Finacial Services Supervisory Agency ("CFSSA"), as the competent authority, addressed the issue of greenwashing in the context of the investors' best interest, meaning that it is not possible to confirm whether CFSSA would consider greenwashing to be contrary to investors' interests and if yes, which practices would be prohibited. Due to the lack of explicit rules governing greenwashing in the financial sector, general consumer protection rules regarding misleading business practices should be observed, along with the rules governing misleading advertising.

According to the Consumer Protection Act ("CPA"), business practice is misleading if it contains inaccurate information, is untrue, or otherwise, including its entire representation, even if the information is factually correct, misleads or is likely to mislead the average consumer, which leads him or is likely to lead him to make a purchase decision that he would not have otherwise made. However, Croatia has not yet developed a framework to target misleading commercial practices concerning environmental matters and it is not clear what practices would be considered misleading in this context. Breaches of consumer law provisions regarding misleading business practices constitute misdemeanors punishable by a fine.

According to the Act on Prohibited Advertising, any advertising that in any way, including its presentation, misleads or is likely to mislead the persons to whom it is addressed or to whom it reaches and is likely to influence their economic behavior as a result is prohibited and constitutes a misdemeanor punishable by a fine. However, as in the case of misleading consumer practices, it is not clear what practices would be considered misleading advertising in the context of environmental matters and greenwashing.

The relevant legal framework in Croatia is based on the EU legislation which is directly applicable or implemented into national law. The requirements relating to the protection of investor's interests derive, for example, from EU legislation (e.g., from Directive 2011/61/EU on Alternative Investment Fund Managers, Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities and Directive 2014/65/EU on markets in financial instruments (recast).

Local consumer protection rules governing misleading business practices are derived from the provisions of Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market, whereas rules governing misleading advertising are derived from the provisions of Directive 2006/114/EC concerning misleading and comparative advertising.

There are currently no guidelines issued by the local competent authorities addressing greenwashing that we are aware of.

Not applicable.

There is no definition of greenwashing under Croatian law. However, the CPA contains a legally binding definition of misleading commercial practices, whereas the Act on Prohibited Advertising addresses misleading advertising practices.

Under the CPA, business practice is misleading if it contains inaccurate information, is untrue, or otherwise, including its entire representation, even if the information is factually correct, misleads or is likely to mislead the average consumer, which leads him or is likely to lead him to make a purchase decision that he would not have otherwise made.

Under the Act on Prohibited Advertising, any advertising that in any way, including its presentation, misleads or is likely to mislead the persons to whom it is addressed or to whom it reaches and is likely to influence their economic behavior as a result is prohibited.

The definition is regulatory binding.

The main challenges seen in addressing greenwashing in the EU financial/banking sector include:

• Lack of awareness/knowledge: The concept of greenwashing is new in the Croatian financial sector and it has not yet gained the significant attention of market participants and the competent supervisory authority. On one hand, that may be due to the size of the Croatian market, whereas on the other hand, the reason for this may be the tendency of the Croatian financial sector to slowly adapt to EU trends. Hence, one of the main challenges is to raise the awareness of the market participants and competent supervisory authorities regarding the relevance of greenwashing.
• Lack of relevant legal rules: There is currently no legal framework governing greenwashing in Croatia. It should be noted that the introduction of new legislation and changes to the existing legislation in Croatia are often dependent on the changes in the EU legislation, meaning that the local legislator rarely adopts legislation without initiative from the EU.
• Lack of clear definition: There is currently no definition of greenwashing and it is unclear which practices would be considered greenwashing.
• Lack of targeted education: Practical training and case studies could be very useful to start activities against greenwashing and to increase overall awareness and understanding of greenwashing practices.

The rules on misleading commercial practices and prohibited advertising are tailored for consumer protection purposes and the consumer protection legislation contains extensive rules regarding these practices, including their definitions and examples of prohibited practices. On the other hand, there is no local legislation that would define greenwashing and determine prohibited greenwashing practices, meaning that competent supervisory bodies would have to extend the concepts of misleading commercial practices and misleading advertising to greenwashing, but without any rules or guidelines governing the matter.

According to our knowledge, so far there have not been any supervisory or enforcement outcomes concerning greenwashing and it is not possible to determine whether the competent supervisory bodies would decide to extend these concepts to greenwashing as well as whether the existing supervisory tools would be appropriate to address greenwashing.

Capital Market Act (OG 65/18, 17/20, 83/21; consolidated version): https://www.hanfa.hr/media/6159/ztk-2021-procisceno-08-2021.pdf) 

AIF Act (OG 21/18, 126/19, 110/21; consolidated version): https://www.hanfa.hr/regulativa/investicijski-fondovi/alternativni-investicijski-fondovi/#section0; 

UCITS Act (OG 44/16, 126/19, 110/21, 76/22; consolidated version): https://www.hanfa.hr/media/6433/zoifjp-procisceni-11-2021.pdf) 

Act on Prohibited Advertising (OG 43/09): https://narodne-novine.nn.hr/clanci/sluzbeni/2009_04_43_984.html) 

Consumer Protection Act (OG 19/22): https://narodne-novine.nn.hr/clanci/sluzbeni/2022_02_19_203.html)

Official legislative texts are available only in the Croatian language.