The far-reaching and global scope of the European Union's rules on greenwashing is causing consternation among Wall Street banks.

With its Corporate Sustainability Reporting Directive (CSRP), the European Union is taking aim at the practice of greenwashing whereby companies make themselves look more environmentally conscious than they are.

But the global reach of the measures of the CSRP is something that banks in the US are very concerned about, according to a story in the «Financial Times» (behind paywall).

The directive was agreed to this summer and will come into effect next June and requires «large» companies operating or having listed securities in the EU to produce extensive reports on the environmental impact of their business and that of their parent company, according to the report.

Extraterritoriality

An expert told the «FT» that while a case can be made for equities listed in the EU, requiring that for all securities is something that could imperil financial markets. «You're going to kill off European capital markets like this», the expert said. 

Bank Complaints

There are two facets of the CSRP with which banks have a particular ax to grind.

One aspect is that they have to disclose the effects of their own company as well as those with which they do business. Financial services firms will be required to show their clients' activities, whereas financial and non-financial services companies have to report on the same day. Banks argue such a deadline should be extended.

In the US in particular, there is «a genuine concern around liability», an industry lobbyist told the newspaper, «if they don't have the availability and reliability of data they need to be able to make their own disclosures, because they can't get that from their clients».

The Full Monty

The second issue for banks is the full imposition of rules on foreign countries that issue any instrument on EU financial markets. The report cited the example of a Japanese company issuing a small bond that could only be sold to institutional investors in Paris, Amsterdam, or Frankfurt.

London may be the beneficiary of these developments because it offers a diverse funding source without the burden of the new rules, the report said.