In Romania, there is currently no explicit or dedicated legal framework that addresses and sanctions greenwashing in the financial sector. Nevertheless, there are certain laws in the financial sector that provide general rules under which greenwashing may fall. The respective laws mainly sanction breaches of the duty to act honestly, fairly, and professionally or of the duty to inform clients in a fair, clear, and non-deceptive manner.

For example, the law on financial instruments markets (Law no. 126/2018) establishes the obligation to act honestly, fairly, and professionally, as well as the obligation to give clear and fair information to clients. In our view, depending on the relevant circumstances, greenwashing might be qualified as a breach of such obligations and, consequently, it may be sanctioned by the Financial Supervision Authority (in Romanian: Autoritatea de Supraveghere Financiară) or other authorities. Breach of the above-mentioned obligations is qualified either as a minor offense (in Romanian: contravenție) or even as a criminal offense if certain conditions are met.

Further, according to the emergency government ordinance regarding undertakings for collective investment in transferable securities and investment management companies (EGO no. 32/2012), investment management companies are required to act with fairness and professional diligence, in the best interests of investors. Breach of this rule of conduct constitutes a minor offense.

In the field of privately managed pension funds or alternative investment fund managers, the administrator is also bound by law to act with honesty, fairness, and professional diligence and to submit annual reports containing accurate and complete information. The breach of these obligations constitutes a minor offense.

More generally speaking, certain provisions of the consumer protection legislation could be also applied to sanction greenwashing, to the extent that greenwashing could be assimilated into a misleading commercial practice in order to induce consumers to trade. In particular, the Law on Combating Unfair Practices of Traders in Relation to Consumers (Law no. 363/2007) defines misleading commercial practices and provides sanctions for those using such practices.

The above-mentioned legislation is mostly based on European legislation. For example, the Law on Combating Unfair Practices of Traders in Relations with Consumers (Law no. 363/2007) implements the Directive 2005/29/EC regarding unfair business-to-consumer commercial practices in the internal market, the Law on Financial Instruments Markets (Law no. 126/2018) implements the Directive 2014/65/EU Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on Markets in Financial Instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.

In addition, there are a few recommendations provided by the Romanian Financial Supervision Authority on the provision of sustainability information in relation to financial products.

Although the legislation in the financial sector does not specifically contemplate greenwashing, the sectorial legislation in the financial sector sanctions breaches by regulated entities performing services in the financial sector of their obligations to act honestly, fairly, and professionally and of their duties to inform clients in a fair, clear, and non-deceptive manner.

The approach in other areas of legislation (i.e., consumer protection legislation) is not significantly different - i.e., consumer protection legislation sanctions practices considered to be misleading.

There is a definition of greenwashing provided by the Financial Supervision Authority in Romania on their website.

Moreover, the general concept of misleading practice given by the Law on Combating Unfair Practices of Traders in Relation to Consumers (Law no. 363/2007) could also apply to greenwashing, which could fall within the concept of misleading practice.

Greenwashing has been defined by the Romanian Financial Supervision Authority in its recommendations as the process of conveying a false impression or providing misleading information about how a company's products or projects are environmentally friendly. Greenwashing is considered a baseless statement to deceive consumers or investors, making them believe that a company's products or production process are environmentally friendly, and used by companies to increase sales and to access funding.

Although not a definition of greenwashing per se, the concept of deceptive/misleading commercial practice set by Law 363/2007 could be broad enough to cover greenwashing. A misleading commercial practice is defined by law as a commercial practice shall be regarded as misleading if it contains false information or, in any circumstances, including a general presentation, misleads or is likely to mislead the average consumer in such a way that it either causes or is likely to cause an average consumer to take a decision that he or she would not have taken otherwise, in relation to the existence or nature of the product/service, the features/characteristics of a product/service, etc.

The definition given by Romania's Financial Supervision Authority is merely informative and not legally binding. The definition in Law no. 363/2007 on combating unfair practices by traders in dealings with consumers is binding.

Main challenges include: 

• Lack of awareness regarding the sustainable investment-related framework and taxonomy (mostly at the level of non-financial companies and consumers).
• Lack of expertise and lack of training in the sustainability area.
• Lack of relevant guidance, lack of best practices and practical criteria, in the context of a broad and rather complex legislative framework.
• Poor quality and reliability of information based on which relevant assessments shall be made.
• The lack of common criteria allows a broad range of views and interpretations.

ASF Recommendations: https://www.asfromania.ro/uploads/articole/attachments/619627dfe59a1282090234.pdf

Consumer Protection Law: https://anpc.ro/galerie/file/alege/2019/Lege_363_2007.pdf

The Regulation Regarding the Protection of Financial Instruments and Funds that Belong to Customers - ASF: https://asfromania.ro/uploads/articole/attachments/62a9ce93cd6d2387485084.pdf

Law no. 126/2018 Regarding Financial Instruments Markets: https://legislatie.just.ro/Public/DetaliiDocument/201860

Emergency ordinance no. 32/2012 Regarding Collective Investment Bodies in Securities and Investment Management Companies: https://asfromania.ro/files/capital/legi/OUG%2032_2012_consolidata_cu_Legea%20268_2015.pdf

Law no. 411/2014 of Regarding Privately Managed Pension Funds: https://legislatie.just.ro/Public/DetaliiDocument/83682

https://www.asfromania.ro/files/capital/legi/Lege%2074%202015%20consolidata.pdf