Greenwashing "remains a fundamental market conduct concern that poses risks to both investor protection and market integrity," a report from international securities regulators group IOSCO said Dec. 4.
Members of the International Organization of Securities Commissions regulate more than 95% of the world's securities markets in 130 jurisdictions.
The IOSCO report, Supervisory Practices to Address Greenwashing, outlines attempts to combat greenwashing that include asset manager disclosures and labels for sustainable finance products, regulatory guidance, and enforcement, but said those have not addressed greenwashing risks, the report said.
While there has been a growing recognition of the economic and financial materiality of climate change and ESG considerations, "there is also a growing concern against misleading claims about ESG risks, opportunities, and impacts," IOSCO board chairman Jean Paul Servais said in a release.
The report outlines current regulatory best practices around the world and challenges that include data gaps, transparency and reliability of ESG ratings, consistency in labeling and product classification.
"Greenwashing can also occur throughout the investment value chain, and any market participant – from issuers to asset managers to ESG ratings and data products providers – can engage in this behaviour. Taken more broadly, greenwashing undermines the fundamental trust in sustainable finance," the report said.