EBA updates POG guidelines to include ESG products and combat greenwashing

The EBA has launched a public consultation to update the Guidelines on the design and governance (Product Oversight and Governance ) of retail banking products (such as mortgages, current accounts, loans) to improve the selling of products with ESG characteristics and avoid risks of greenwashing .

The proposed amendments therefore aim to clarify existing POG requirements to prevent consumer harm, such as misleading commercial practices or misleading marketing, when offering ESG products. The EBA clarifies, however, that it does not intend to impose new regulatory burdens, but rather to improve the quality and consistency of sustainable offerings by intermediaries.

The initiative follows the EBA's 2024 report on greenwashing, which highlighted a sharp increase in suspicious cases in the financial sector: cases in the European banking system rose from 40 in 2018 to 234 in 2023. The document also emphasizes that greenwashing not only concerns environmental aspects but also includes social and governance misconduct, with approximately 23% of cases considered "cross-ESG." Alongside this empirical evidence, the EBA takes into account a rapidly evolving European regulatory framework, such as recent regulatory revisions, such as the amendments to the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR).

In light of these recent developments and the growing risk of consumer harm if financial institutions fail to meet the highest standards of business conduct when offering ESG-based products, the EBA has concluded that a revision of the current POG Guidelines for retail banking products is necessary. Therefore, in this consultation document, the EBA proposes a revision of the POG Guidelines with the aim of making ESG and greenwashing aspects more explicit in the existing requirements when offering and selling ESG-based products to consumers.

The consultation will remain open until October 9, 2025 , but the EBA has already scheduled an online public hearing for September 11 to gather input from industry stakeholders. The final guidelines are expected in the first quarter of 2026 and will become applicable from December 1 of the same year .

Going into detail, the document proposes changes in six areas : the scope of the guidelines, the manufacturer's internal controls, target customers, distribution channels, information flows to distributors, and consumer support. The goal is to ensure that ESG products are constructed and sold consistently with their stated purposes, avoiding inconsistencies between declared characteristics and actual benefits.

In the first area, relating to the subject of the guidelines , the EBA proposes to clarify that the POG safeguards also apply to products with ESG characteristics, clarifying that these considerations must be integrated already in the design and monitoring phase of the product life cycle.

Regarding manufacturer internal controls , the role of governance in managing greenwashing risk is strengthened. Management will be required to establish specific processes to identify, prevent, and address misleading ESG claims, including through adequate training for the relevant personnel.

In the third area, that of the customer target , the need for ESG products to be effectively consistent with the sustainability preferences of the target audience is underlined, avoiding misleading associations between product and consumer.

Regarding distribution channels , the EBA clarifies that manufacturers must select distributors with the necessary expertise to understand and properly communicate the ESG characteristics of their products. The growing complexity of ESG issues requires strengthening the selection and monitoring of distributors.

Regarding information flows to distributors , the document introduces requirements to ensure that sustainability-related communications are clear, transparent, and up-to-date. ESG statements must therefore be supported by concrete evidence, avoiding generic or potentially misleading statements.

Finally, regarding consumer support , the importance of providing complete and truthful information is reiterated, especially when it comes to ESG products. The distributor must ensure that the messages conveyed are consistent with the product profile, avoiding the risk of misselling and thus protecting the integrity of the customer relationship.