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[null,"Prepared By:","Contributors:"]
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["Greenwashing in the EU Financial Sector"]
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["Report Generated: 5/1/2025"]
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["Question","Hungary"]
["EBA Greenwashing Report"]
["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, anti-unfair competition law…)?","Yes, Hungary does have a legally binding framework addressing and sanctioning behavior that can be considered as \"greenwashing\" which applies to the financial sector too, however, the sector-specific rules are currently regulated by soft-law type instruments of the Hungarian financial regulator MNB (see in more detail below).\nThe legally binding provisions addressing behavior that can be considered as \"greenwashing\" is enacted in \nAct XLVII of 2008 on the Prohibition of Unfair Business-to-Consumer Commercial Practices, which is not a law specific to the financial sector but a general one, covering the financial sector too.\n"]
["Is the relevant legal framework based on the EU or on the national legislation?","The legally binding general legal framework is based on national legislation.\nThe additional sector-specific soft-laws (recommendations, circulars, Q&A-s) of the national financial regulator MNB are, however, closely connected to EU laws, esp. \nRegulation (EU) 2019/2088 and \nRegulation (EU) 2020/852, and the \nEBA report on ESG Risk Management and Supervision (EBA/REP/2021/18)."]
["Is greenwashing, which may occur in the financial sector, addressed specifically and/or any differently from greenwashing in other sectors?","Greenwashing in the financial sector is basically addressed by statutory law non-specifically (see above), however, the framework is specific to the financial sector players in terms of sanctions. The soft laws and guidance of the national financial regulator MNB (see below), however, address sector-specific behaviors, also providing good and bad practices from a sector-specific perspective.\n"]
["Does the current legal framework provide a definition of greenwashing? If yes, how it is defined, is the definition regulatory-binding?","There is currently no legislative positive definition of greenwashing under Hungarian law. However, from the prohibition of environmental impact-related misleading behavior, one can derive a definition of greenwashing in a certain sense.\nMore precise (positive) definitions have been provided so far in the financial regulatory guidances and legal literature only.\nPursuant to \nAct XLVII of 2008 on the Prohibition of Unfair Business-to-Consumer Commercial Practices (non-official translation from Hungarian):\nSection 6\n(1) A commercial practice shall be regarded as misleading if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to one or more of the following elements, and in either case causes or is likely to cause him to take a transactional decision that he would not have taken otherwise: \n(...) \nb) the main characteristics of the goods, in particular:\n(...)\nbi) their environmental impact.There is no legally binding definition of greenwashing per se, but the legal provision cited above concerning misleading commercial practice in respect of the environmental impact of the goods is legally binding.\n"]
["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 sector?"," The main challenges are related to: \n \n the interpretation of various requirements of the SFDR and the Taxonomy Regulation , e.g.\n \n how and to what extent the manner of ESG risk integration must be described [ SFDR Art. 6 (1) (a) ], \n whether the assessment of the impact of ESG risks should be quantitative [ SFDR Art. 6 (1) (b) ], \n \n \n exact distinctions of certain terms used by the EU Regulations and their relation, \n way of compliance on those fields where the corresponding RTS-es are not yet available/effective, esp. what the MNB's expectations of \"compliance to a reasonable extent\" and \"principal compliance\" means in practice, \n when and/or to what extent the regulated entity is subject to a re-authorization obligation if, e. g. the \"proportion\" undertaken pursuant to Art. 5 (b) of the Taxonomy Regulation  is not achieved. \n \n In various cases, the terminology of the Taxonomy Regulation is not in full sync with the previously existing national terminology which is a challenge for national regulators when it comes to providing interpretation or distinction of key terms. "]
["Are there any relevant links to national legislation and/or guidance?","National legislationAct XLVII of 2008 on the Prohibition of Unfair Business-to-Consumer Commercial Practices: \nhttps://net.jogtar.hu/jogszabaly?docid=a0800047.tv in Hungarian);\nMost relevant soft laws and guidance of the national financial regulatorRecommendation No 10/2022. (VIII.2.) of the MNB on climate-related and environmental risks and the integration of environmental sustainability considerations into the activities of credit institutions: \nhttps://www.mnb.hu/letoltes/green-recommendation-vol2-no-10-2022-viii2.pdf (unofficial English translation);\nCircular letter of MNB (No. 129526-3/2021) in connection with regulation (EU) 2019/2088 on sustainability-related publications in the financial services sector: \nhttps://www.mnb.hu/letoltes/129526-3-2021-sfdr-vezetoi-korlevel.pdf. (in Hungarian);\nMNB Q&A (June 29, 2022) in relation to the application of EU regulations 2019/2088 and 2020/852: \nhttps://www.mnb.hu/letoltes/20220629-sfdr-tr-qa-final.pdf. (in Hungarian). \n"]