Three Regulators, Three Definitions of 'Sustainable.' Your ESG Disclosure Strategy Needs a Dictionary.

Executive Summary: The US, EU, and UK now define sustainability-related terms differently, enforce different rules, and punish different violations. A claim that satisfies one regulator can trigger enforcement from another. Recent fines against Invesco ($17.5 million), DWS (EUR 25 million), and Aviva (Luxembourg's first ESG penalty) show that regulators are no longer issuing warnings. This post breaks down the divergence, explains what companies get wrong, and walks through a practical "definitions bank" approach that compliance teams are adopting to stay out of trouble.

The word 'sustainable' means three different things now

If you manage ESG disclosures for a company that operates across borders, you already know the headache. It has gotten worse in the past twelve months.

In the United States, "ESG" itself has become politically loaded. Federal enforcement focuses on accuracy: did you describe your practices correctly? The SEC fined Invesco Advisers $17.5 million in November 2024 because the firm labeled assets "ESG-integrated" when some were passive funds that didn't use ESG criteria at all. The violation wasn't doing ESG. It was claiming to do ESG when you weren't.

The word "sustainability" is quietly replacing "ESG" in US corporate communications because it carries less political weight. Same concepts, different packaging.

In the European Union, the regulatory machinery is more developed but also less stable. The Sustainable Finance Disclosure Regulation (SFDR) created detailed categories (Article 6, 8, and 9 funds) with specific requirements. But the framework is under review, and terms like "sustainable investments" and "transition" assets are being redefined. The EU's Omnibus Simplification Package, announced in early 2026, scaled back CSRD reporting requirements for many companies. National regulators aren't waiting for the review to finish, though. The European Supervisory and Markets Authority has told them to enforce SFDR as written.

The results speak for themselves. DWS, Deutsche Bank's asset manager, was fined EUR 25 million by the Frankfurt Public Prosecutor for overstating green credentials. The Danish Financial Supervisory Authority criticized three Article-9 funds for "significant shortcomings" in March 2025. Luxembourg's CSSF issued its first ESG-related fine against Aviva for not applying its own exclusion strategy.

In the United Kingdom, the approach is different again. HM Treasury shelved the proposed UK Green Taxonomy in July 2025, deciding it wasn't the right tool. Instead, the UK uses principle-based rules anchored by an anti-greenwashing rule requiring sustainability claims to be "correct and substantiated." Less prescriptive than the EU, but the rule gives regulators wide latitude when claims don't hold up.

Why companies keep getting this wrong

The pattern across every enforcement action looks similar. A company used language that sounded right but didn't match what was actually happening inside the business.

Invesco said funds were "ESG-integrated." Some weren't. DWS overstated green credentials. Aviva's fund had an exclusion strategy on paper that wasn't applied in practice. The Danish cases involved funds claiming Article-9 status without the processes to back it up.

These aren't cases of fraud. They're cases of imprecision. The teams writing the disclosures used terms they thought were accurate, but the regulatory definition was more specific than they realized. Or the definition had changed since they last checked.

Here's the core problem: when three jurisdictions define the same word differently, using that word without specifying which definition you mean is dangerous. And the danger is growing because all three are actively enforcing.

The definitions bank: a practical defense

Some compliance teams have started building what practitioners call a "definitions bank." It's an internal glossary of every ESG-related term the company uses, with jurisdiction-specific definitions for each.

In practice, it works like this:

Pick your terms. Start with the words that show up most often in your disclosures, marketing materials, and investor communications. Common ones: sustainable, ESG-integrated, transition, net-zero, carbon neutral, green, climate-aligned, responsible. Each means something different depending on who's reading.

Map the regulatory definitions. For each term, document how the SEC, SFDR/CSRD/Taxonomy, and FCA interpret it. Where there's no official definition, note that too, because an undefined term is a term you define by how you use it.

Write your own definition. Based on the regulatory map, write a company-specific definition that holds up across all applicable jurisdictions. If that's not possible (sometimes it isn't), write jurisdiction-specific versions and flag which one applies where.

Use the definitions consistently. Every disclosure, every marketing piece, every investor deck should pull from the same glossary. When someone writes "our sustainable investment strategy," they should know exactly what "sustainable" means in that sentence and which regulatory framework it aligns with.

Review quarterly. The regulatory environment is shifting. The EU is revising SFDR. The SEC's posture changes with administrations. The UK framework is still developing. Your definitions bank needs regular updates, not a one-time effort.

The greenhushing trap

Some companies have responded to enforcement risk by simply saying less. This is called "greenhushing," and it's spreading, especially among US firms watching the political winds.

The instinct is understandable but creates its own risks. In the EU, companies subject to CSRD still have mandatory reporting obligations even after the Omnibus simplification. Saying less doesn't exempt you from disclosure requirements. And in the UK, the principle-based approach means that omitting material information can be just as problematic as overstating it.

There's also a competitive cost. Companies that go quiet about genuine sustainability work lose the ability to stand out with customers, employees, and investors who care about these issues. As Council Fire noted in a recent analysis, corporate spending on stakeholder value programs is actually increasing even as the "ESG" label falls out of fashion in some quarters.

The answer isn't to say less. It's to say exactly what you mean.

Five things to do this quarter

If you're responsible for ESG disclosures at a company with exposure to more than one jurisdiction, here's what to prioritize now:

Audit your current language. Pull every ESG-related claim your company has made in the past year: annual reports, fund documents, marketing materials, website copy, investor presentations. Flag any term that could be interpreted differently by the SEC, SFDR, or FCA.

Build your definitions bank. Start with the 10 to 15 terms that appear most often. This doesn't need to be a six-month project. A focused compliance team can have a working version in two to three weeks.

Involve legal early. ESG disclosure is a legal matter now, not just a communications task. If your legal team isn't reviewing ESG language before it goes out, change that. The Invesco and DWS cases both involved language that a legal review would likely have caught.

Train your communications team. The people writing your sustainability report, updating your website, and preparing investor materials need to understand that the words they choose carry regulatory weight. This isn't about censorship. It's about being precise.

Watch the EU Omnibus carefully. The SFDR review and Omnibus simplification are both still in progress. When definitions change, your disclosures need to change with them. Set up a monitoring process now. Council Fire's ESG reporting guide tracks these regulatory shifts.

The bigger picture

The divergence between US, EU, and UK ESG frameworks isn't going to converge anytime soon. The US is moving toward less prescriptive federal rules with more political scrutiny. The EU is simplifying its framework while national regulators increase enforcement. The UK is charting its own principles-based course.

For companies operating across these jurisdictions, the old approach of writing one set of ESG disclosures and hoping it works everywhere is finished. The companies that avoid enforcement actions over the next few years will be the ones that treat every sustainability claim as a specific, verifiable statement tied to a clear definition.

That takes some of the poetry out of sustainability communications. But poetry is what got Invesco a $17.5 million fine. Precision is what keeps you out of trouble.

Frequently asked questions

What is a definitions bank for ESG disclosures?

A definitions bank is an internal glossary that maps how your company uses ESG-related terms, with jurisdiction-specific definitions for each. It makes sure that when your team writes "sustainable" or "ESG-integrated," everyone knows what that means and which regulatory framework it aligns with.

Which jurisdictions are most actively enforcing ESG disclosure rules?

All three major ones. The SEC has fined firms for inaccurate ESG claims (Invesco, $17.5M). EU national regulators have penalized funds under SFDR (DWS EUR 25M fine, Aviva Luxembourg penalty, Danish Article-9 criticisms). The UK's FCA anti-greenwashing rule gives regulators broad authority to act against claims that aren't backed up.

Is it safer to just stop talking about ESG?

"Greenhushing" avoids greenwashing risk but creates other problems. Companies with mandatory reporting obligations can't simply go quiet. And staying silent means missing the chance to differentiate with stakeholders who value sustainability work. Better to be precise than silent.

How often should we update our ESG disclosures?

Review your definitions bank and key disclosures quarterly at minimum. The EU is revising SFDR and the Taxonomy. The SEC's enforcement posture shifts with political changes. The UK framework is still developing. Quarterly reviews keep you current.

Does this apply to private companies or just public ones?

Any company making public sustainability claims should pay attention. While securities regulations mainly target public companies and fund managers, the UK's anti-greenwashing rule and the EU's Green Claims Directive cover marketing claims by any business. If you're saying something about sustainability on your website, in a pitch deck, or in marketing materials, accuracy matters regardless of ownership structure.