Greenwashing Risks in the Financial Sector: Why ESG Product Governance Is Becoming a GRC Issue

The European Banking Authority (EBA) has revised its Product Oversight and Governance Guidelines for retail banking products. The updated guidelines place a stronger focus on products with environmental, social or governance characteristics and on the risk of greenwashing.

For banks, financial service providers and other regulated companies, this is an important signal. ESG compliance is becoming more operational. It is no longer enough to mention sustainability features in marketing materials or product information. Companies need to demonstrate how ESG claims are created, reviewed and monitored throughout the product lifecycle.

Key Takeaways

The EBA published its revised Product Oversight and Governance Guidelines on 30 June 2026. They explicitly address ESG characteristics and greenwashing risks and are expected to apply from 11 January 2027.

For GRC leaders, this means ESG product governance needs to be more closely integrated with risk management, internal controls, approval processes, documentation and ongoing monitoring.For GRC leaders, this means ESG product governance needs to be more closely integrated with risk management, internal controls, approval processes, documentation and ongoing monitoring.

Why the EBA Is Addressing Greenwashing More Closely

ESG-related products are no longer a niche topic in the financial sector. Banks and financial service providers increasingly offer loans, accounts and other products with sustainability-related features.

At the same time, the risk is growing that ESG claims are too broad, misleading or insufficiently supported. The EBA therefore wants sustainability characteristics to be clearly defined, reviewed and monitored rather than used purely as a communication tool.

Greenwashing is consequently becoming not only a marketing or reputational risk, but also a governance and control issue.

ESG Claims Need Robust Governance

Any company describing a product as sustainable, green or ESG-oriented should be able to explain which criteria and data support that claim and who reviewed it.

Companies also need to understand where customers could misinterpret sustainability statements and which controls prevent exaggerated or unsupported claims.

These questions should not be limited to marketing approval. They need to be embedded in the organisation’s broader governance framework.

Product Governance Is Becoming an Evidence Issue

The EBA guidelines cover the entire product lifecycle, from development and approval to distribution, monitoring and adjustment.

For ESG-related products, sustainability characteristics should be clearly defined during product development. Sales and marketing communications must remain consistent with those characteristics, while complaints, market developments and regulatory changes should feed into ongoing monitoring.

This makes ESG product governance an evidence issue. In an audit or regulatory review, companies need to show that sustainability claims were part of a controlled and documented process.

What GRC Leaders Should Review Now

Companies should first identify which products use ESG characteristics or sustainability claims. They should then review who is responsible for defining, checking and approving those claims and where greenwashing, compliance or reputational risks could arise.

Controls around data quality, accuracy and documentation are equally important.

Ultimately, organisations should be able to answer one simple question: Can we demonstrate why an ESG claim was accurate, who reviewed it and which controls supported it?

Why Excel and Email Approvals Quickly Reach Their Limits

Many companies still manage product approvals, risks and evidence through Excel files, emails and separate document repositories.

With ESG claims, however, complex dependencies can quickly emerge between data sources, internal criteria, legal assessments, approvals and marketing materials.

If this information is not connected, it becomes increasingly difficult to demonstrate how decisions were made and which controls were applied.

Conclusion: Greenwashing Prevention Starts with Governance

The revised EBA guidelines make one thing clear: ESG claims need to be manageable, verifiable and supported by evidence.

Greenwashing prevention is therefore no longer just a communication task. It is becoming an important part of modern Governance, Risk and Compliance.

Companies should review whether their ESG-related product processes are sufficiently documented, controlled and audit-ready.

Zazoon helps organisations centrally manage ESG product governance, risks, controls and evidence and turn manual processes into a more robust GRC practice.

FAQ

What has the EBA published?

The EBA has published revised Product Oversight and Governance Guidelines for retail banking products. They explicitly address ESG characteristics and greenwashing risks.

Which companies are affected?

The guidelines apply to manufacturers and distributors of products within the EBA’s remit, including mortgages, personal loans, deposits, payment accounts, payment services and electronic money.

Why is this relevant for GRC?

Because ESG claims need to be supported organisationally. Companies require clear responsibilities, risk assessments, controls, approvals and evidence.

What is greenwashing in financial products?

Greenwashing occurs when sustainability claims are misleading, exaggerated, unclear or insufficiently supported.

How does Zazoon support ESG product governance?

Zazoon connects risks, controls, responsibilities, policies and evidence in one central GRC system, making ESG-related product processes more transparent and easier to audit.