Modern Challenges for Consumer Protection Law: ESG-Washing as Unfair Commercial Practice

Abstract

The paper critically examines the relationship between Environmental, Social and Governance (henceforth ESG) and consumer protection law, highlighting the appearance of a new phenomenon, known as ESG-washing, an evolution of the phenomenon “greenwashing” that can be evaluated as a new kind of unfair commercial practice. Although the incorporation of ESG criteria in businesses’ policies intends to have a good purpose (i.e. the protection of investors), the ‘deviation’ of ESG criteria can have significant side effects on consumers. This ‘deviation’ has already led to great dimensions so it could be reasonable argued that the greenwashing phenomenon has evolved through the ESG-washing phenomenon, covering not only environmental claims (greenwashing) made by businesses, but also claims about their social responsibility and ethical corporate governance. However, despite the dimensions that ESG-washing has had, there is no specific, clear, strict legal framework on it, while courts seem to be reluctant to evaluate it as unfair commercial practice, considering the jurisprudence about greenwashing in existence up to now. The paper aspires to highlight the ‘tension’ that can exist between ESG(-washing) and consumer protection law, which up to this date is quite underestimated, highlighting the necessity for policy makers to reconsider the existing legal framework about consumer protection against unfair commercial practices, to enable ESG-washing to be included within it, and for courts to be able to reassess the jurisprudence thereon.