Greenwashing in the EU Financial Sector |
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Finland |
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(Europe)
Firm
Roschier, Attorneys Ltd.
Contributors
Mikko Manner |
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| Does your jurisdiction have an explicit legal framework to identify, address and sanction greenwashing in the financial sector? If yes, is it enacted in a specialized law or addressed by other regulations (advertising law, consumer protection law,... | Both Finland and Sweden rely strongly on EU regulations and other international standards and have similar national legislation, so both are answered here. They do not have any explicit legal framework dedicated to identifying, addressing and sanctioning greenwashing in the financial sector. However, the Finnish Financial Supervisory Authority (FIN-FSA) has addressed the ESG and sustainability-related issues for example its supervision release from 30 November 2022, where it reminds fund operators, asset managers and investment advisors of the application of EU legislation on sustainable financing. The supervision release notes that the EU regulation on Sustainability‐Related Disclosures in the Financial Services Sector (2019/2088, SFDR) has come into force mainly since 10 March 2021 and its application has later been supplemented with more detailed rules. In addition, it states that there are new EU regulations for fund operators and investment service providers regarding the consideration of sustainability risks in the company's investment activities and risk management and new EU regulations for investment service providers regarding the consideration of customers' sustainability preferences. The FIN-FSA has also issued Guidelines on the Marketing of Financial Services and Products (dated 10 June 2013) based on Finnish financial legislation such as the Securities Markets Act (746/2012) and the Act on Investment Services (747/2012), which prohibit false and misleading marketing in the financial markets, but greenwashing is not specifically mentioned. In general, the use of inappropriate and unfair marketing is regulated in the Consumer Protection Act (38/1978), but it applies only to consumer marketing and does not have specific provisions regarding greenwashing. |
| Is the relevant legal framework based on the EU or on the national legislation? | All national guidelines regarding this matter are based on EU legislation, such as the SFDR, the EU Regulation on the Establishment of a Framework to Facilitate Sustainable Investment (2020/852) and ESMA's Supervisory Briefing on Sustainability Risks and Disclosures in the Area of Investment Management (dated 31 May 2022). As small countries, Finland and Sweden rely highly on EU-wide collaboration and instruments. |
| Is greenwashing, which may occur in the financial sector, addressed specifically and/or any differently from greenwashing in other sectors? | As stated earlier, financial sector-specific instruments are highly based on EU legislation and there is no financial sector-specific national legislation regarding greenwashing. |
| Does the current legal framework provide a definition of greenwashing? If yes, how it is defined, is the definition regulatory-binding? | There is no general definition of greenwashing in Finnish or Swedish legislation. However, the Finnish Consumer Ombudsman has provided specific guidelines on environmental marketing which prohibit greenwashing, although the term is not explicitly defined. The Consumer Protection Act prohibits false and misleading marketing on a general level, and in the Guidelines of the Finnish Consumer Ombudsman, more detailed rules on the use of environmental claims are given. |
| What are the main challenges legal experts see in addressing greenwashing in the EU financial/banking sector and what are the main challenges in implementing the existing regulatory framework to address greenwashing within the EU financial/banking... | Complicated and somewhat unclear technical criteria for what is considered green and what is considered greenwashing are one of the challenges. Also, the fact that there is no clear national legislation on this issue is a challenge, as well as the apparently differing standards and practices between other EU countries. More diligent supervision and enforcement of the already existing rules would also be needed in order to tackle unlawful greenwashing. We do not consider there to be challenges in implementing the existing framework as Finland and Sweden already rely on it. |
| Are there any relevant links to national legislation and/or guidance? | FIN-FSA supervision release 30 November 2022 - 56/2022 (FIN): https://www.finanssivalvonta.fi/tiedotteet-ja-julkaisut/valvottavatiedotteet/2022/finanssivalvonta-muistuttaa-rahastotoimijoita-omaisuudenhoitajia-ja-sijoitusneuvojia-kestavaa-rahoitusta-koskevan-saantelyn-soveltamisesta/ FIN-FSA Decrees and Guidelines 15/2013, 10 June 2013, FIVA 6/01.00/2012 (FIN): https://www.finanssivalvonta.fi/saantely/maarays-ja-ohjekokoelma/menettelytavat/15_2013/ The Securities Markets Act (746/2012) (FIN): https://www.finlex.fi/fi/laki/ajantasa/2012/20120746 The Act Investment Services (747/2012) (FIN): https://www.finlex.fi/fi/laki/ajantasa/2012/20120747 The Consumer Protection Act (38/1978) (FIN): https://www.finlex.fi/fi/laki/ajantasa/1978/19780038 The Finnish Consumer Ombudsman's guidelines on the use of environmentally oriented claims in marketing, updated in 2019 (FIN): https://www.kkv.fi/en/consumer-affairs/facts-and-advice-for-businesses/the-consumer-ombudsmans-guidelines/the-use-of-environmentally-oriented-claims-in-marketing/ |
Greenwashing in the EU Financial Sector
Both Finland and Sweden rely strongly on EU regulations and other international standards and have similar national legislation, so both are answered here. They do not have any explicit legal framework dedicated to identifying, addressing and sanctioning greenwashing in the financial sector. However, the Finnish Financial Supervisory Authority (FIN-FSA) has addressed the ESG and sustainability-related issues for example its supervision release from 30 November 2022, where it reminds fund operators, asset managers and investment advisors of the application of EU legislation on sustainable financing. The supervision release notes that the EU regulation on Sustainability‐Related Disclosures in the Financial Services Sector (2019/2088, SFDR) has come into force mainly since 10 March 2021 and its application has later been supplemented with more detailed rules. In addition, it states that there are new EU regulations for fund operators and investment service providers regarding the consideration of sustainability risks in the company's investment activities and risk management and new EU regulations for investment service providers regarding the consideration of customers' sustainability preferences.
The FIN-FSA has also issued Guidelines on the Marketing of Financial Services and Products (dated 10 June 2013) based on Finnish financial legislation such as the Securities Markets Act (746/2012) and the Act on Investment Services (747/2012), which prohibit false and misleading marketing in the financial markets, but greenwashing is not specifically mentioned.
In general, the use of inappropriate and unfair marketing is regulated in the Consumer Protection Act (38/1978), but it applies only to consumer marketing and does not have specific provisions regarding greenwashing.
All national guidelines regarding this matter are based on EU legislation, such as the SFDR, the EU Regulation on the Establishment of a Framework to Facilitate Sustainable Investment (2020/852) and ESMA's Supervisory Briefing on Sustainability Risks and Disclosures in the Area of Investment Management (dated 31 May 2022).
As small countries, Finland and Sweden rely highly on EU-wide collaboration and instruments.
As stated earlier, financial sector-specific instruments are highly based on EU legislation and there is no financial sector-specific national legislation regarding greenwashing.
There is no general definition of greenwashing in Finnish or Swedish legislation. However, the Finnish Consumer Ombudsman has provided specific guidelines on environmental marketing which prohibit greenwashing, although the term is not explicitly defined.
The Consumer Protection Act prohibits false and misleading marketing on a general level, and in the Guidelines of the Finnish Consumer Ombudsman, more detailed rules on the use of environmental claims are given.
Complicated and somewhat unclear technical criteria for what is considered green and what is considered greenwashing are one of the challenges. Also, the fact that there is no clear national legislation on this issue is a challenge, as well as the apparently differing standards and practices between other EU countries. More diligent supervision and enforcement of the already existing rules would also be needed in order to tackle unlawful greenwashing.
We do not consider there to be challenges in implementing the existing framework as Finland and Sweden already rely on it.
FIN-FSA supervision release 30 November 2022 - 56/2022 (FIN): https://www.finanssivalvonta.fi/tiedotteet-ja-julkaisut/valvottavatiedotteet/2022/finanssivalvonta-muistuttaa-rahastotoimijoita-omaisuudenhoitajia-ja-sijoitusneuvojia-kestavaa-rahoitusta-koskevan-saantelyn-soveltamisesta/
FIN-FSA Decrees and Guidelines 15/2013, 10 June 2013, FIVA 6/01.00/2012 (FIN): https://www.finanssivalvonta.fi/saantely/maarays-ja-ohjekokoelma/menettelytavat/15_2013/
The Securities Markets Act (746/2012) (FIN): https://www.finlex.fi/fi/laki/ajantasa/2012/20120746
The Act Investment Services (747/2012) (FIN): https://www.finlex.fi/fi/laki/ajantasa/2012/20120747
The Consumer Protection Act (38/1978) (FIN): https://www.finlex.fi/fi/laki/ajantasa/1978/19780038
The Finnish Consumer Ombudsman's guidelines on the use of environmentally oriented claims in marketing, updated in 2019 (FIN): https://www.kkv.fi/en/consumer-affairs/facts-and-advice-for-businesses/the-consumer-ombudsmans-guidelines/the-use-of-environmentally-oriented-claims-in-marketing/