Almost forty years ago the term appeared for the first timegreenwashingIt is 1986 when the American environmentalist Jay Westerveld uses this expression within his essay, after observing, in the bathroom of his hotel in Fiji, a card in which he proposes to the guest to hang the towel used, in order to avoid washing it, that would cause waste of water and dispersion of detergents in the environment. Westerveld noted however that such attention to the environment was more an expression of opportunism than of a real commitment: the initiative limited itself to bathrooms and allowed the hotel an economic saving, while in the rest of the structure there was no concrete evidence of ecological sensitivity.
From the coining of the term to the present day, the phenomenon of greenwashing has become increasingly legally important, thus becoming a central theme for Community and national legislation, which tries to curb and suppress such practices in order to preserve a harmonious and correct development of the market, for the benefit of consumers and competitors.
If market players intend to invest in sustainable business shares and obligations, in securities that finance environmental or social projects (such as green bonds) or, more generally, in financial instruments that promote sustainability characteristics, they may stumble into greenwashing. This is an incorrect commercial practice, in which products, activities or projects to be financed are presented as more sustainable than they are in reality, i.e. better than the truth from an environmental point of view, the impact on society or corporate governance. In other words, greenwashing means saying or doing things that do not clearly and correctly reflect the sustainability profile of an entity.
From the legal point of view, this phenomenon is due, inter alia, to the discipline of unfair commercial practices, and more precisely, it is considered in many cases an unfair form of competition, pursuant to Article 2598 (3) of the EC Treaty. It is therefore a practice that can be misleading for consumers, investors and other market participants.
Contrary to what it would appear, responsible for such unfair behaviour may be not only the entities that are the subject of the claims or those responsible for the product, but also an entity that provides advice or information on the product, or a third party (such as an agency that certifies its sustainability).
In this context, greenwashing is frequently manifested through misleading forms of communication, which may consist both in the dissemination of false information, and in the presentation of true data expressed in an ambiguous, incomplete or liable to mislead the recipient. Commercial communication, in fact, must not be evaluated only on the basis of its formal truthfulness, but also in relation to its concrete capacity to influence the economic behaviour of the average consumer.
From the legal point of view, these conducts are contrary not only to the special legislation on consumer protection, but also to the general principles of the Civil Code, in particular to the obligations of fairness and good faith laid down in Articles 1175 and 1375 of the Civil Code. These principles require companies to adopt fair and transparent behaviour in the conduct of economic activities and in relations with the market.
Furthermore, the dissemination of non-truthful or misleading environmental information can complement a breach of professional diligence obligations, understood as the level of competence and attention that can reasonably be expected from an operator in the sector. The company is therefore required not only to avoid manifestly false statements, but also to prevent any form of ambiguous or suggestive communication that may generate a distorted impression of reality.
The consumer dimension of greenwashing: unfair commercial practices and consumer protection
In a first reconstruction, the phenomenon of greenwashing takes on a significant importance in the context of consumer protection, as environmental statements can significantly influence purchasing choices. Environmental communication without adequate verification requirements can in fact integrate incorrect commercial practice under the Consumer Code, as well as a form of misleading advertising likely to be intervention by the Competition and Market Authority (AGCM). The consumer policy, based on the B2C report, is oriented towards the protection of the structurally weaker part of the market, i.e. the consumer, and is based on the principle that the information provided must be clear, truthful and not likely to mislead about the essential characteristics of the product, including its environmental qualities.
It follows that the use of generic, unverifiable or unscientific claims may be classified as unlawful, as it is liable to distort the economic behaviour of the average consumer.Eni (2021), in which the AGCM sanctioned the company for promoting a fuel as . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
On this basis, the European legislator has progressively intervened to strengthen the instruments to combat misleading environmental communications. In particular, Directive (EU) 2024/825, transposed into Italian law by Legislative Decree No 30 of 2026, has affected both the discipline of unfair commercial practices and the information obligations towards consumers. Among the main innovations, the scope of Article 21 of the Consumer Code has been extended, including among the relevant elements also the environmental and social profiles of the product, as well as aspects related to its circularity, such as durability, repairability and recyclability.
The reform aims to strengthen the transparency and verification of environmental declarations, requiring companies to base their claims on reliable and proven elements, including through appropriate certification systems. In this context, specific practices have also been identified which are considered in any case misleading, including the use of vague or unverifiable environmental claims, the exploitation of characteristics already mandatory by law or the formulation of declarations on future performances without adequate support plans.
However, while it constitutes a significant garrison, the consumeristic approach in itself seems insufficient to grasp the complexity of the phenomenon. It focuses on the protection of the individual consumer, without fully considering the systemic implications of greenwashing in terms of corporate transparency and market integrity. It follows the need to accompany the B2C perspective with a broader reading, capable of framing the phenomenon also in the light of the rules of company law and financial markets.
The progressive juridification of sustainability: ESG disclosure in European legislation (CSRD and ESRS)
Another decisive step forward, carried out by the Community legislator, instrumental in the fight against greenwashing is the CSRD (Corporate Sustainability Reporting Directive). It is framed as one of the main tools introduced by the European Union to increase the transparency and reliability of information on the sustainability of companies.
The CSRD, which entered into force in 2023, replaces and strengthens the previous Non-Financial Reporting Directive (NFRD). Its objective is to oblige a much larger number of companies to provide detailed, standardised and verifiable information on their performance in the environmental, social and governance fields. In particular, the Directive applies to large companies, listed companies (with some exceptions for micro-enterprises) and, progressively, to certain non-European companies operating in the Union market.
One of the central elements of the CSRD is the introduction of much more stringent reporting requirements. Companies must include in their financial statements a section dedicated to sustainability, drawn up according to common European standards (ESRS). Among the main obligations is that of the so-called double materiality, i.e. the need to report both the impact and the activities of the company on the environment and society, and the risks and opportunities that environmental and social factors entail for the company itself. The directive also imposes greater responsibility on the administrative bodies, which must ensure the correctness and completeness of the information provided. Businesses can no longer confine themselves to generic or unverifiable statements, but must provide concrete, measurable and comparable data, thus contributing to greater transparency towards investors, consumers and other stakeholders.
In this context, the ESG information, acronym for Environmental, Social and Governance, plays a key role. It is essential to assess the sustainability of an enterprise, it is a set of data describing the behaviour of the enterprise in three main areas. The first is the environmental one (Environmental), which concerns, for example, greenhouse gas emissions, the use of natural resources, waste management and the overall impact on the ecosystem. The second is the social sphere (Social); the third is that of governance (Government), which concerns the structure and functioning of corporate bodies, transparency, corporate ethics and internal control systems.
The impact of greenwashing on financial markets
Another aspect to be taken into account in relation to the impact of greenwashing on the economy is its potential influence on financial markets, as well as on consumers. Greenwashing, in fact, when involving listed companies does not only constitute an incorrect commercial practice, but can complement a violation of financial market discipline, as it is capable of influencing investor decisions and altering the proper functioning of the market. In this sense, two fundamental regulatory texts are highlighted: the TUF (Single Finance Text) and the MAR (Market Abuse Regulation).
In an economic context in which ESG criteria play an increasingly central role in investment choices, information disseminated by companies on sustainability becomes crucial for assessing the risk and value of a security. Investors tend to favour companies perceived as sustainable, considered more reliable in the long term and less exposed to reputational or regulatory risks. Precisely for this reason, untrue environmental communication can have a significant impact on the dynamics of the market, generating a distorted representation of the business's economic reality.
If a listed company therefore disseminates non-true or exaggerated environmental information (e.g. declaring it to be
As a result, greenwashing can be a violation of the TUF, due to the lack of transparency and the dissemination of incorrect information, and, in the most serious cases, also as a violation of the MAR, if the information disseminated is suitable to manipulate the market. Thus, there is a transformation of the phenomenon: from commercial illegal, relevant mainly in the relationships between business and consumer, to real financial illegal, with far wider implications.
Sanctions Profiles
Following the outline of the descriptive and normative characteristics of the phenomenon, it is appropriate to continue the argument by dealing with the sanctioning aspects. The aforementioned EU Directive 2024/825 also introduced new practices in the black list of commercial practices considered in any case misleading and liable to sanctions (introduced in art. 23 of the Italian Consumer Code): (i) to display a sustainability mark not based on a certification scheme; (ii) to formulate a generic environmental statement whereby the economic operator is unable to demonstrate the recognised excellence of the environmental performances he has; (iii) to formulate an environmental statement on the product or economic activity as a whole, when it concerns, on the other hand, only a certain aspect of the product and/or activity; (iv) to assert that a product has a neutral, reduced or positive impact on the environment on the basis of greenhouse gas emissions compensation;
Therefore, a company that creates greenwashing practices can face different forms of responsibility and sanctions of both administrative and, in the most serious cases, criminal. First, in the context of consumer law, the Competition and Market Authority (AGCM) can ascertain the presence of incorrect commercial practice and impose even very high financial penalties, as well as order the termination of misleading communication.
From a civil point of view, the company may be called upon to respond for unfair competition and for breach of the principles of fairness and good faith, with a consequent obligation to compensate for damages to competitors or consumers harmed. Moreover, in cases where greenwashing affects the financial market, for example through the dissemination of untruthful ESG information by listed companies, the penalties provided for by the TUF and the MAR may apply.
Finally, in addition to the legal consequences, the company often suffers significant reputational damage, with loss of confidence from consumers and investors, which can significantly affect its competitive position in the market.
In dealing with criminal profiles, it is therefore conceivable that incorrect information in the environmental field could be relevant in this sense: (i) fraud: commercial communication is not true of the real environmental benefit and in this sense is likely to mislead the consumer in the choice of the product, service or investment; (ii) fraud on the market: sale to the buyer of one thing for the other (aliud prolio) with delivery of a product sold for, for example, 'sustainable' or 'green', but which, in reality, is not; (iii) false social communications: false environmental information affecting or altering the company's economic and property data; (iv) update: crime consisting in the manipulation of the market through the dissemination of false or misleading news, or through simulated operations, in order to alter the price of financial instruments and obtain an economic advantage. In Italian law, it is governed, inter alia, by art. 2637 of the Italian Civil Code, while at European level it is one of the conducts prohibited by the aforementioned Market Abuse Regulation (MAR).
The DWS case: greenwashing as misleading ESG disclosure
A particularly significant case to understand the legal relevance of greenwashing in the context of financial markets is the DWS Group, an asset management company controlled by Deutsche Bank.
The issue began in 2021 when the attention of the supervisory authorities was drawn by statements made by a former company manager, who publicly denounced a alleged discrepancy between DWS' external communication on sustainability and actual internal investment practices. In the documentation for investors and annual reports, the company had declared a very high share of its assets (equal to hundreds of billion euros) as managed according to integrated ESG criteria.
According to the investigations initiated by the Securities and Exchange Commission (SEC) in the United States and BaFin in Germany, these claims were, at least in part, not supported by adequate internal evaluation processes, i.e. the inclusion of sustainability criteria in decision-making processes appeared less systematic and rigorous than reported to the market.
In 2022, the US authorities also searched the offices of the company and the parent Deutsche Bank in Frankfurt, as part of a joint investigation into the possible spread of misleading sustainability communications. The procedure was concluded in 2023 with an agreement between DWS and the SEC, within which the company agreed to pay a penalty for having provided incorrect or misleading statements on the integration of ESG factors into its investment processes.
In particular, the SEC challenged DWS's breach of the provisions on the correctness and transparency of information provided to investors, noting that internal sustainability policies had not actually been implemented in the terms described in official documents.
The relevance of the case lies in the fact that, for the first time so explicitly, a supervisory authority has qualified ESG statements as information that can complement a misleading disclosure of investors. This implies that the sustainability communication cannot be considered as a merely reputational area, but must be assessed in the light of the same standards of accuracy and verification as governing financial information.
Administrators' duties and information ESG: managing responsibility and application limits of business judgement rule
The growing legal importance of ESG information directly affects the position and duties of directors, who are required to ensure not only the proper management of the enterprise, but also the reliability of information disseminated to the market and stakeholders.
In this perspective, greenwashing can supplement a violation of the duties imposed on them. In particular, pursuant to art. 2392 of the Italian Civil Code, administrators must fulfil their obligations with the diligence required by the nature of the task and their specific competences, while art. 2381 of the Italian Civil Code requires them to ensure an adequate organizational structure and a correct flow of information within the company.
The dissemination of incorrect, unverifiable or incomplete ESG information is contrary to these obligations, which is a form ofmala gestionfrom an information point of view.
Relevant pipelines can take different forms: from overestimate of environmental performance, to the omission of negative data, to the construction of ... green narrations not supported by objective evidence. In all these cases, the company information is altered, resulting in impairment of the custody of recipients.
A particularly relevant profile concerns the relationship between greenwashing andbusiness judgement rule. This principle limits the judicial union on the management choices of directors, provided that they are assumed in an informed, rational and in the interest of society. However, this protection does not extend to the hypotheses in which false or misleading information is involved. Greenwashing, in fact, does not concern the entrepreneurial discretion, but the truthfulness of the information, thus subtracting itself from the scope of the business judgement rule.
It follows that directors may be called upon to respond to the harmful consequences arising from greenwashing practices, both towards society (through the social action of liability), and towards members and third parties, pursuant to art. 2395 of the Italian Civil Code. In this context, the role of the supervisory bodies and auditors, who are called to monitor the correctness of the corporate information, including that of a non-financial nature, is also important.
Greenwashing and corporate governance: stakeholder theory and constitutional limits to the economic initiative (Article 41 of the Constitution)
The emergence of greenwashing as a legal problem is part of a broader process of evolutionary corporate law, characterized by the progressive overcoming of a vision exclusivelyshareholder-orientedIn this context, the interest of stakeholders, including those related to environmental and sustainability protection, which are increasingly affecting the definition of the objectives and responsibilities of business activity, is becoming increasingly important.
A particularly significant reference in this direction is the recent reform of Article 41 of the Constitution, which has further strengthened the environmental limits to the exercise of the private economic initiative. In particular, Constitutional Law No 1/2022 provided that the economic initiative, while free, cannot take place in such a way as to cause damage to health and the environment, alongside the already foreseen limits on social usefulness, security, freedom and human dignity.
This intervention takes on a systemic scope in the Italian legal system, as it explicitly includes environmental protection among the constitutional parameters intended to guide and limit the activity of the enterprise, helping to strengthen the publicistic dimension of sustainability and redefine the boundaries of economic freedom.
In the light of this regulatory evolution, greenwashing can be interpreted as a failure of corporate governance, as well as as an expression of a deficit of accountability of corporate leadership, insofar as it reflects the inadequacy of organisational structures and control systems aimed at ensuring the reliability of ESG information, including in relation to core business. More specifically, the dissemination of misleading environmental communications highlights critical issues in decision-making processes, internal information flows and verification and supervision mechanisms.
In this perspective, the contrast to greenwashing cannot be exhausted in sanctionsex post, but requires a strengthening of internal governance tools, through the integration of ESG factors into internal control and risk management systems. It follows that sustainability no longer constitutes an ancillary or merely reputational element, but rather as a structural parameter of the corporate organisation, whose proper management directly affects the legitimacy of entrepreneurial action in the medium to long term.
Regulatory developments and prospects: towards a growing juridification of sustainability
The growing importance of ESG factors is reflected today in both regulation and market dynamics. The introduction of CSRD and ESRS standards is only one step in a broader process of sustainability juridification, aimed at reducing information asymmetries and ensuring greater reliability and comparability of data communicated by companies.
At the same time, there is an intensification of supervisory mechanisms, both by supervisory authorities and through assurance and non-financial information review instruments. At the same time, the role of the market and institutional investors is strengthened in calling for ever higher standards of transparency and accountability, helping to redefine expectations towards companies.
This leads to a gradual reduction in the scope of discretion in ESG communication, which makes it increasingly less legally sustainable, even before the reputational one, greenwashing practices. The shift from a system based mainly on soft law and self-discipline to a model characterized by binding legal obligations marks, in fact, a paradigm change destined to have a profound impact on the organizational structures and strategies of companies.
The contrast to greenwashing can no longer be traced to a merely sanctioning logic, but must be understood as an integral part of a broader transformation of the information function of the enterprise. Sustainability, as an accessory or communicative element, assumes the appearance of a structural legal parameter, whose correct representation becomes an indispensable condition for the protection of the integrity of the market.
In the final analysis, the credibility of ESG information is not only a factor of transparency, but is an essential prerequisite for the legitimacy of enterprise activity in the contemporary economic and social context.