178 Abstract The European Union relies on sustainable finance to mobilize private capital in support of climate and sustainability objectives. Central elements of this strategy are extensive sustainability-related disclosure obligations, particularly under the Sustainable Finance Disclosure Regulation (SFDR). Yet these requirements can contribute to the transformation of the economy only if they are effectively enforced and if greenwashing is credibly sanctioned. This article examines the private-law enforcement mechanisms available under German law against asset management companies that breach sustainability-related disclosure obligations. The article argues that prospectus liability extends to material sustainability-related information even where it does not affect the financial characteristics of an investment product, thereby reflecting a recalibrated investor model that includes idealistic sustainability preferences. By contrast, the provisions under the SFDR are not to be considered as protective laws under Sec. 823 (2) German Civil Code (BGB) as neither the German protective law doctrine nor EU law’s principle of effectiveness currently mandates broad negligence-based liability. Tort liability under Sec. 826 BGB remains available only in exceptional cases. The article further demonstrates that unfair competition law, particularly the consumer damages claim under Sec. 9 (2) German Act against Unfair Competition, offers a targeted and effective supplementary enforcement tool, capable of addressing enforcement gaps and strengthening investor protection against greenwashing in the capital market.
Jonas Gnauert (Sun,) studied this question.