The EBA clarifies its Product Oversight and Governance Guidelines which address greenwashing risks in ESG products

The European Banking Authority (EBA) today published revised Guidelines on product oversight and governance (POG) for retail banking products. They clarify requirements for products with environmental, social and governance (ESG) features whenever offered and sold to consumers and address greenwashing risks. The Guidelines aim to ensure that financial institutions apply robust standards when designing and distributing ESG-related retail products, with a view to reducing the risk of consumers being misled or sold products that do not meet their needs.

Targeted amendments make ESG and greenwashing considerations more explicit throughout the product lifecycle, particularly where such products are marketed to consumers. They have been introduced in key sections of the Guidelines, including manufacturers’ internal control functions, identification of the target market, distribution channels, and information provided to distributors, as well as information and support for manufacturers’ arrangements.

In addition, the Guidelines include non-substantive updates to reflect changes introduced in 2020 to the revised EBA Founding Regulation, as well as the revision of the EBA Guidelines on internal governance under the Capital Requirements Directive (CRD) and the sound management of third-party risk (SMTPR). These updates remove outdated provisions and ensure overall consistency with the current regulatory framework, in line with the EBA's work to simplify and build a more efficient regulatory and supervisory framework.

The EBA Guidelines will be published in all 24 languages in 2026. The Guidelines will apply from 11 January 2027.

Background and legal basis

The EBA first issued its POG Guidelines in 2016 to address conduct risks and strengthen consumer protection in retail banking. The Guidelines are addressed to manufacturers and distributors of products within the EBA’s remit, including mortgages, personal loans, deposits, payment accounts, payment services and electronic money.

Recent legislative and market developments, particularly the growing prominence of ESG products, have necessitated this revision to better reflect ESG objectives and explicitly address greenwashing risks, while maintaining high standards of business conduct.

The EBA developed the Guidelines in accordance with Article 16 of Regulation (EU) No 1093/2010, which empowers the EBA to issue guidelines to ensure the effective and consistent application of European Union law.

The European Supervisory Authorities (ESAs) common understanding of greenwashing is a practice whereby sustainability-related statements, declarations, actions or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, financial product or financial service. Such practices may mislead consumers, investors or other market participants (see EBA/REP/2024/09).