Dutch AFM sets four standards to curb misleading sustainability claims

The Netherlands Authority for the Financial Markets released its third ESG Update on January 27, 2026, requiring sustainability claims to be accurate, specific, accessible, and substantiated to eliminate greenwashing. Designated a top 2026 supervisory priority, it offers Indian financial institutions a template for evidence-based ESG disclosure aligned with tightening global standards.

The Netherlands Authority for the Financial Markets (AFM) released its third ESG Update on January 27, 2026, targeting the integrity of sustainability-related disclosures following an exploratory study across 2024 and 2025 of banks, insurers, investment firms, and pension providers. The update introduces four improvement areas: claims must be factually accurate and representative of the entire product or entity, must specify what a claim means for a particular product within the same information layer, must have easily accessible public substantiation, and must explain baseline years, greenhouse gases included, and carbon offset roles for climate-neutrality, rating, and impact claims.

Banks, insurers, investment firms, and pension providers in the Netherlands are directly affected and must align disclosures with the four standards. Firms emphasising minor green initiatives while ignoring core-portfolio impacts face stricter enforcement against the resulting halo effect. Marketing departments must coordinate with sustainability and risk management teams to avoid legal repercussions. Retail and institutional investors benefit from clearer metrics and methodologies. Third-party verifiers gain accessible underlying data to audit ESG performance. Firms using ESG ratings must clarify these often measure financial risk rather than positive environmental impact.

Financial institutions should treat compliance as mandatory, given the AFM designated sustainability claims a top supervisory priority for the 2026 fiscal year with stricter enforcement of representative disclosure standards. Firms should define metrics and methodologies within the same information layer as claims, provide direct links or clear references to underlying data, and disclose baseline years, greenhouse gases included, and the role of carbon offsets in net-zero strategies. Institutions should align marketing with sustainability and risk teams and prepare for alignment with the Corporate Sustainability Reporting Directive.

Key figure — Supervisory priority: top 2026 fiscal year focus for AFM