Beyond Smoke And Mirrors In Sustainable Finance And Corporate Sustainability

Just seven weeks into 2026, and European sustainable finance supervision has already delivered two important signals to the market.

First, the European Central Bank has fined Crédit Agricole approximately €7.5 million for missing a regulatory deadline to assess the materiality of its climate-related and environmental risks, in line with an earlier penalty imposed on ABANCA. The imposition of these fines by the ECB underscores its expectation that climate risk assessments constitute a prudential obligation, with process failures carrying direct supervisory consequences and potentially undermining a bank’s sustainability credibility.

Second, the Dutch Authority for the Financial Markets (AFM) has announced intensified scrutiny of sustainability claims, citing weaknesses in accuracy, clarity, substantiation, and explanation of complex assertions such as climate neutrality, ESG ratings and impact. This reflects a shift in Europe from promoting sustainability narratives to examining their evidential foundations

Outside Europe, the Federal Court of Australia dismissed a claim brought by the Australasian Centre for Corporate Responsibility (ACCR) against gas giant Santos concerning alleged misstatements on net zero ambitions and clean energy positioning. While the court’s reasoning is still pending, the case highlights a broader reality: climate-related assertions now carry material litigation risk. Regardless of outcome, such proceedings generate legal costs, management distraction and reputational exposure, underscoring the growing legal salience of sustainability communications.

Attention is also rapidly shifting towards AI as a proposed climate solution. A recent report commissioned by Beyond Fossil Fuels and Climate Action Against Disinformation finds benefits are often overstated and potential environmental harms underexamined. Crucially, it finds a lack of clear, verifiable evidence that widely deployed tools deliver “material, measurable, and substantial” emission reductions, and reinforces that claims about AI’s climate impact must meet the same evidentiary standards as any other sustainability assertion.

What emerges across these seemingly separate events is a structural change in expectations related to sustainability statements and disclosures. Multiple accountability mechanisms are now actively defining the boundaries of permissible sustainability claims with emphasis extending to the robustness of the systems, controls and methodologies that underpin them.

For financial institutions and corporate organizations, the implications are immediate. Sustainability communication now sits squarely at the intersection of regulatory compliance, risk management, legal exposure and capital market trust (see Verdantix Strategic Focus: The Growing Importance Of A Coherent Sustainability Narrative).

Firms are responding to this intensifying scrutiny. Despite the EU Omnibus simplification package, early CSRD disclosures indicate a willingness among some organizations to exceed minimum assurance requirements, including the use of reasonable assurance for selected metrics – such as greenhouse gas emissions and workforce data – to build credibility. Corporate strategies are beginning to move from greenhushing to greenguarding: prioritizing claims that are precise, substantiated and defensible (see From Claims To Credibility: Making Sustainability Claims Stick).

In a similar vein, Verdantix predicts a marked increase in the assurance of product-level sustainability information, with more than a third of FTSE 250 firms expected to publish independent assurance opinions on product sustainability claims in 2026. Recent acquisitions by Bureau Veritas and SLR Consulting demonstrate growing demand for traceable and verifiable sustainability evidence, particularly at the product level.

One thing is abundantly clear: across sustainable finance and corporate sustainability, the focus is slowly shifting from the scale of commitments to the rigour of supporting evidence. Financial institutions and businesses need to adapt – and quickly.