Estonia does not have any explicit legal framework dedicated to identifying, addressing and sanctioning greenwashing in the financial sector. However, the prerequisite for financial market participants is to act ‘[with honesty, accuracy and due diligence]’ (see paragraph 309 of the Estonian Investment Funds Act, as an example). The Estonian Investment Funds Act also includes provisions and gives the Estonian Financial Supervisory Authority the competence to address and take appropriate measures in situations where the financial market participant has (potentially) presented 'inaccurate or misleading' information.

Additionally, the requirement for financial market participants '[..to act with honesty and integrity...]' is embedded in the Estonian Securities Act throughout.

The Estonian Financial Supervisory Authority has a (whistleblowing) channel where to provide information about (potential) illegal activities related to subjects under financial supervision. (https://www.fi.ee/en/consumer/when-should-i-contact-finantsinspektsioon/notify-us-about-illegal-activities) 

As mentioned above, Estonia does not have any explicit legal framework dedicated to identifying, addressing and sanctioning greenwashing. However, paragraph 16 of the Estonian Consumer Protection Act provides a definition of a ' misleading trading practice'. Furthermore, paragraph 4 of the Estonian Advertising Law prohibits 'misleading advertising' practices from its subjects.

The relevant legal framework mostly derives from EU legislation.

There is no definition of 'greenwashing' under Estonian law. However, the Estonian Consumer Protection Act and the Estonian Advertising Act prohibit providing misleading or unfounded information to customers. Furthermore, paragraph 16 of the Estonian Consumer Protection Act deems ‘misleading trading practices' to be illegal.

There is no general definition of 'greenwashing' under Estonian law. However, the Estonian Consumer Protection Act and Advertising Act entail the prohibition to provide misleading or unfounded information to customers. The Estonian Advertising Act prohibits the use of certain words "keskkonnasõbralik" ["environment-friendly"] or "ökoloogiliselt ohutu" ["ecologically safe"] or other words or expressions with the same meaning if there is no such evidence (§ 3 section 15 of the Advertising Act). Furthermore, the Estonian Consumer Protection Act prohibits 'misleading' trading practices that are not allowed by law. (§ 16. Misleading Trading Practice).

Paragraph 16 of the Estonian Consumer Protection Act states that "a trading practice is misleading if the trader or service provider gives you false information about the goods or services or provides the correct information in a way that is likely to mislead you because it is unclear, incomprehensible, or ambiguous; does not provide you with important information that you would need to know when making a purchase decision (e.g., information about the main features and price of the goods or services, maintenance and spare parts related to the use of the goods)".

Furthermore, pursuant to paragraph 3 section 4 (15), the Estonian Advertising Act states that "advertising shall not contain the words "keskkonnasõbralik" ["environment-friendly"] or "ökoloogiliselt ohutu" ["ecologically safe"] or other words or expressions with the same meaning if there is no such evidence".

The definition is regulatory binding. 

The main challenges in implementing the existing regulatory framework to address greenwashing within the EU financial/banking sector include:

• Lack of awareness/education: Implementing programs to upskill the board and employees in the financial sector on the fundamentals of ESG and the risk of greenwashing is a good starting point.
• Lack of clear legal definition: lack of legal definition of 'greenwashing'.
• Unvalidated/unregulated use of third-party data: Overreliance on unvalidated/unregulated third-party data (i.e. provided by ESG rating companies), where financial market participants might unknowingly/unintentionally participate in greenwashing activities. Up to this date, third-party data providers function in an unregulated market without much transparency regarding their sources of data and methodologies used.
• Lack of understanding of the business value in ESG-related data: It is difficult to access correct ESG data, especially in your value chain(s). Companies failing to understand the link between ESG and business tend to take ESG data collection and reporting as a mere box-ticking compliance exercise. Potentially leading to reporting false or inaccurate ESG data.
• Complicated (technical) standards: Over-reliance that financial market participants to understand, interpret and apply and assess very technical (and still evolving) requirements (i.e. EU Taxonomy Regulation) is (overly) optimistic.
• Ambiguity within sustainability-related legislation: For example, how to correctly recognize and assess SFDR Article 8 products. The SFDR also does not provide clarity to what extent (%) ESG characteristics need to be taken into account to be ‘promoting environmental and social characteristics’, as required by the Regulation. Additionally, some financial market participants use the term SFDR ‘Article 8+' product, which adds to the confusion.
• Lack of expert-level training and knowledge-sharing: Practical training and case studies could be very useful to start improving on identifying (potential) greenwashing activities.

The Estonian Advertising Act: https://www.riigiteataja.ee/en/eli/ee/504032022001/consolide/current 

The Estonian Consumer Protection Act: https://www.riigiteataja.ee/akt/101042022007?leiaKehtiv

The EstonianSecurities Market Act: https://www.riigiteataja.ee/en/eli/512122022005/consolide

The Estonian Investment Funds Act: https://www.riigiteataja.ee/en/eli/531012023005/consolide