Green standards and grey areas: the EU Sustainable Finance Framework and the Unfair Commercial Practices Directive

Abstract

This study examines whether the marketing of financial products that formally comply with the European Union (EU) Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation (EU Taxonomy) may still constitute an unfair commercial practice under the EU Unfair Commercial Practices Directive (UCPD). It focuses on the promotion of the most ambitious category of sustainable investment products in Europe—often referred to as ‘Article 9’ products—which (partly) invest in controversial transitional activities such as nuclear energy, fossil gas, aviation, or shipping. Although such investments are classified as environmentally sustainable under the EU Taxonomy, they may not align with the expectations of the average retail consumer investor seeking genuinely ‘green’ financial products. The analysis highlights the complementary role of the UCPD, particularly in light of the recent EU Consumer Empowerment Directive, which—once transposed into national law—will introduce explicit anti-greenwashing provisions. It argues that, in the absence of specific restrictions under the SFDR or the EU Taxonomy on the use of commercial sustainability claims, the UCPD offers an essential legal framework to assess the potentially misleading nature of such claims.