France has introduced one of the world’s first legal sanctions directly against greenwashing, in a ruling that would mean that guilty parties could be fined up to 80% of the cost of the false promotional campaign, a published correction on billboards or in the media, and a 30-day clarification on the company website.
The legal amendment, number 5419, filed on April 1 within a consumer code review on climate change and resilience (text no 3995) was put forward by Aurore Bergé, a French Deputy in the country’s National Assembly representing President Macron’s LREM party (La République en Marche) in the Yvelines district to the west of the greater Paris region.
The vote passed unanimously by 59 votes to zero, to applause from Deputies from LREM and the centrist MoDem parties.
It means that the greenwashing rule will now enter into force within France’s commercial code, which already has tough rules on false advertising.
France has been tightening a number of laws recently on the ESG front.
RI reported in February that the country’s Treasury (Le Ministère de l'Économie, des Finances et de la Relance: Ministry of Economy, Finance and Growth) had opened a market consultation for feed-in on plans to tighten up the landmark Article 173 regulation on ESG and climate change reporting.
Last month, the French government launched a consultation on updating its official SRI label for investment funds. It plans to tighten the criteria for the label, which has seen take-up double over recent years.
Meanwhile, last week the French central bank set up a Climate Change Centre to act as a hub to for its climate initiatives. The bank also confirmed its plans to exit coal in its own portfolio by 2024 and revealed that it had aligned its equity portfolio with a 2°C warming target and has invested more than €1.7bn in green assets.
Around the world, rulemakers are beginning to intervene in financial markets to prevent greenwashing. Denmark’s regulator recently set up a unit to stop companies marketing products as greener than they are and monitor investors’ sustainability disclosures. The US Securities and Exchange Commission is also forming a task force to identify potential corporate and investment ESG violations.
In Germany, investors have urged the government to rate all financial products from 1-5 on sustainability – too late for German bank Deka, which is being sued over an allegedly misleading ‘impact calculator’ for one of its funds.