European financial regulators on Tuesday appealed to stakeholders to help them better understand the characteristics, drivers and risks of greenwashing, and to identify potential greenwashing practices.

The call for evidence was launched by the European Union’s European Supervisory Authorities, made up of the European Banking Authority and the European Securities and Markets Authority in Paris and the European Insurance and Occupational Pensions Authority in Frankfurt.

In the statement, the ESAs cited “rapidly changing regulatory regimes” along with growing demand for sustainability-related products and “the need to better understand which areas may become more prone to greenwashing risks” as the reason for the call.

Financial institutions covered by regulators and other stakeholders are encouraged to participate in an ESA survey designed to collect information, which ends on January 23, 2023.

The EU has asked the three authorities to lead the investigation as it continues to develop a sustainable finance framework, including legislation currently being negotiated which will “significantly increase transparency and require substantiation of sustainability claims on the financial market,” the EU mandate said.

While existing European policies, including the Sustainable Financial Disclosure Regulation and a green taxonomy, provide the basis for defining greenwashing and unfair green claims, “further investigation and common understanding of the specific characteristics and ways in which greenwashing can materialize in the financial market are needed,” EU Mandate said.

“The effectiveness of sustainable finance policies depends on an adequate level of supervision and enforcement across the EU” throughout the investment chain and product life cycle, says the mandate .