EBA clarifies product oversight guidelines to address greenwashing in ESG products

The European Banking Authority (EBA) has published revised Guidelines on product oversight and governance (POG) for retail banking products. These guidelines clarify requirements for products with environmental, social, and governance (ESG) features when offered and sold to consumers, addressing greenwashing risks.

The aim is to ensure that financial institutions apply robust standards when designing and distributing ESG-related retail products, reducing the risk of consumers being misled or sold unsuitable products.

Amendments explicitly incorporate ESG and greenwashing considerations throughout the product lifecycle, especially in marketing, internal controls, target market identification, distribution channels, and information provided to distributors and manufacturers.

The Guidelines also include non-substantive updates reflecting changes from 2020 to the EBA Founding Regulation, the Guidelines on internal governance under the Capital Requirements Directive (CRD), and the management of third-party risks. These updates remove outdated provisions and align with the current regulatory framework.

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

Background: The EBA issued its initial POG Guidelines in 2016 to address conduct risks and enhance consumer protection in retail banking. The revised Guidelines respond to recent legislative and market developments, particularly the rise of ESG products, to better address greenwashing risks while maintaining high standards of conduct.

The Guidelines are issued under Article 16 of Regulation (EU) No 1093/2010 to ensure consistent application of EU law.