Consumer protection; ESG labelling; greenwashing; retail investor vulnerability; sustainable finance regulation

The rapid expansion of ESG-labelled investment products in the European Union has transformed sustainable finance into a mainstream retail market offering. Through digital platforms such as banking applications and robo-advisors, “green” investments are increasingly presented as both ethically desirable and financially responsible. While EU regulation has significantly strengthened sustainability-related disclosure through instruments such as MiFID II, the Sustainable Finance Disclosure Regulation (SFDR), the EU Taxonomy Regulation, and the Unfair Commercial Practices Directive (UCPD), sustainability classification does not imply reduced financial risk. Nevertheless, simplified ESG labels, fund names, and digital interface design may influence investor perception, particularly among vulnerable retail investors with limited financial literacy. This paper examines whether the current EU legal framework adequately protects retail investors from misleading sustainability framing in digital environments. It argues that EU sustainable finance law remains predominantly disclosure-based and insufficiently attentive to behavioural and perceptual effects. The paper proposes a more integrated interpretation of financial and consumer protection rules, emphasising vulnerability and the need to distinguish clearly between environmental alignment and financial safety.

AFRI, OBBIE