Banking Law and ESG-Related Financial Disputes in Spain

1. Introduction

ESG-related financial disputes in Spain arise where banking, investment, lending, securities, or financial-services activities intersect with Environmental, Social and Governance (ESG) obligations.

These disputes can involve:

• misleading sustainability or “green” claims;
• ESG-labelled investment products;
• green bonds and sustainability-linked loans;
• climate-related disclosures;
• environmental representations made during financing;
• unfair or opaque banking terms;
• consumer protection and financial transparency;
• governance failures by banks and financial institutions;
• inadequate ESG risk assessment;
• breach of fiduciary, contractual, or regulatory duties;
• discrimination or other “social” risks in automated lending;
• directors' and executives' responsibility for ESG failures.

A significant point for legal study is that Spain does not yet have a large body of reported judgments specifically involving banks and ESG-labelled financial products. Consequently, ESG banking disputes are currently constructed through a combination of Spanish banking law, securities law, consumer law, advertising/competition law, EU sustainable-finance legislation, and general contractual liability. The 2025 Santander Commercial Court greenwashing judgment is particularly important because it is one of Spain's clearest judicial treatments of environmental claims.

2. Legal Framework

A. Spanish Banking and Financial Regulation

The principal legal framework includes:

1. Spanish banking supervision

Banks are subject to supervision principally through:

• Banco de España
• European Central Bank, for significant institutions within the Single Supervisory Mechanism
• CNMV, where securities and investment services are involved

ESG considerations increasingly form part of prudential risk management.

A bank therefore cannot treat climate and other ESG risks as purely voluntary corporate-social-responsibility matters when those risks materially affect:

• credit risk;
• market risk;
• operational risk;
• liquidity;
• reputation;
• capital adequacy;
• governance.

B. EU Sustainable-Finance Rules

Spanish financial institutions operate within the EU framework, including:

• EU Taxonomy Regulation
• Sustainable Finance Disclosure Regulation (SFDR)
• Corporate Sustainability Reporting Directive (CSRD)
• European Green Bond Regulation
• MiFID II sustainability-preference requirements
• EU rules concerning misleading environmental claims
• prudential requirements concerning ESG and climate risk.

Consequently, a Spanish bank offering an investment product as environmentally sustainable may face liability if the product's actual characteristics do not correspond to its representations.

3. What Is an ESG-Related Financial Dispute?

An ESG financial dispute can generally be divided into six categories.

4. Environmental / Green-Finance Disputes

Suppose a bank advertises a loan as a “100% green financing facility”, but a significant part of the money is actually used for activities inconsistent with the applicable green-finance criteria.

Potential legal consequences may involve:

1. contractual liability;
2. misrepresentation;
3. consumer-protection law;
4. securities regulation;
5. advertising law;
6. market-conduct rules;
7. regulatory sanctions;
8. damages.

The important question becomes:

Was the ESG representation sufficiently precise, verifiable and supported by evidence?

5. Greenwashing as a Financial Dispute

Greenwashing occurs when an institution creates a misleading impression concerning the environmental or sustainability characteristics of:

• a financial product;
• investment strategy;
• loan;
• bond;
• bank;
• corporate activity.

For banks, the risk is especially significant because ESG claims may influence investment decisions.

For example:

“This investment fund finances only sustainable companies”

is considerably more legally significant than a general statement such as:

“We support a greener future.”

The first statement is capable of being objectively tested.

6. Spanish Case Law

Because direct Spanish bank + ESG precedents remain limited, the following cases are important for constructing the legal principles governing ESG-related banking disputes.

Case 1 — Iberdrola Energía España v Repsol

Judgment No. 12/2025, Commercial Court No. 2 of Santander, 21 February 2025

Case: Iberdrola Energía España, S.A.U. v Repsol group

Court: Juzgado de lo Mercantil No. 2 de Santander

Judgment: No. 12/2025

ECLI: ES:JMS:2025:7

This is one of the most important recent Spanish cases concerning greenwashing.

Iberdrola challenged various Repsol communications and advertising campaigns concerning sustainability and the energy transition.

The claims included allegations of:

• misleading advertising;
• unfair competition;
• misleading environmental representations;
• greenwashing.

The legal basis included Articles 5 and 7 of the Spanish Unfair Competition Act (Ley de Competencia Desleal) and related advertising legislation.

Court's decision

The Commercial Court dismissed the claim in its entirety.

The judgment therefore did not establish that Repsol had committed the alleged unfair-competition practices.

ESG significance

The case is extremely important because it demonstrates that:

Not every broad sustainability statement automatically constitutes legally actionable greenwashing.

The court examined the communications in their commercial and contextual setting and considered whether they were capable of misleading the relevant consumer.

Banking relevance

Although the defendant was not a bank, the reasoning can become highly relevant to:

• green loans;
• sustainable investment funds;
• ESG bonds;
• sustainability-linked products;
• bank websites;
• ESG investment advertisements.

A bank making specific environmental claims could face a similar dispute if the claims materially misrepresent the characteristics of a financial product.

Case 2 — GP and BG v Banco Santander

CJEU Case C-561/21, 25 April 2024

This case originated from Spain and concerned Banco Santander and a mortgage agreement.

The dispute concerned a contractual clause requiring consumers to bear certain mortgage-related costs.

The Spanish Supreme Court referred questions to the Court of Justice of the European Union concerning the limitation period for restitution following an unfair-term finding.

The CJEU held that consumer protection cannot effectively be undermined by starting the limitation period before the consumer could reasonably know the legal consequences of the unfair term.

ESG relevance

Although this was not an environmental case, it is highly relevant to the social and governance components of ESG.

The case reinforces:

• consumer protection;
• transparency;
• fairness;
• effective remedies;
• responsible banking conduct.

Banking lesson

A bank cannot simply rely upon contractual formalism where the customer lacks meaningful knowledge of the consequences of a potentially unfair contractual term.

This principle can become important for ESG-linked financial products where complex sustainability clauses are inserted into consumer or investment contracts.

Case 3 — ZR and PI v Banco Santander

CJEU Case C-265/22, 13 July 2023

This case also involved Banco Santander and a Spanish mortgage.

The issue concerned a variable-interest mortgage whose reference rate was based on mortgage rates and whether the contractual arrangement satisfied the requirements of transparency and protection against unfair terms.

The CJEU examined the relationship between:

• transparency;
• consumer understanding;
• reference-rate methodology;
• unfair contractual terms.

ESG significance

ESG financial products are frequently technically complex.

A sustainability-linked loan or ESG investment product may contain:

• ESG performance indicators;
• sustainability targets;
• adjustment mechanisms;
• exclusions;
• scoring methodologies.

The Banco Santander case demonstrates that formal disclosure is not necessarily enough.

The customer must be placed in a position to understand the economic consequences of the contractual mechanism.

Principle

Transparency must be substantive, not merely documentary.

That principle is highly relevant to ESG-linked banking products.

Case 4 — Aziz v Caixa d'Estalvis de Catalunya

CJEU Case C-415/11, 14 March 2013

This is one of the foundational Spanish banking-consumer cases.

The dispute involved a Spanish mortgage and contractual provisions concerning enforcement.

The CJEU developed important principles concerning the protection of consumers against unfair contractual terms.

ESG relevance

The case belongs primarily to the S — Social and G — Governance dimensions of ESG.

It established the importance of:

• effective judicial protection;
• consumer equality;
• contractual fairness;
• protection against abusive banking practices.

Application to ESG banking

An ESG-labelled financial contract can still contain unfair terms.

Calling a financial product “green”, “sustainable” or “responsible” does not exempt the bank from ordinary consumer-protection obligations.

Case 5 — Banco Primus v Gutiérrez Naranjo

CJEU Case C-421/14, 26 January 2017

This case concerned Spanish mortgage lending and the consequences of unfair contractual clauses.

The CJEU addressed the interaction between:

• res judicata;
• unfair contractual terms;
• effective consumer protection.

ESG significance

This case is relevant to ESG disputes because it demonstrates the importance of effective enforcement.

An ESG disclosure regime would have little value if financial institutions could avoid meaningful judicial scrutiny through procedural barriers.

Banking principle

The financial institution's contractual rights must be balanced against mandatory consumer protections.

For ESG-linked financial products, this supports the proposition that courts can scrutinise contractual mechanisms despite the technical sophistication of financial documentation.

Case 6 — Andriciuc and Others

CJEU Case C-186/16, 20 September 2017

This case concerned foreign-currency loans and transparency of financial risk.

Although not an ESG case, it is particularly relevant to complex financial products.

The CJEU emphasised the need for consumers to understand the economic consequences and risks associated with contractual mechanisms.

ESG application

Consider a sustainability-linked loan where the interest rate changes according to the borrower's ESG performance.

For example:

• ESG target achieved → interest rate decreases;
• target missed → interest rate increases.

If the methodology for calculating the ESG performance is incomprehensible, the customer may argue that the contract was insufficiently transparent.

Thus, Andriciuc provides useful reasoning for disputes involving sophisticated financial products.

Case 7 — Energías Sostenibles y Medioambiente 1 v Banco Santander and Unicaja

Madrid Court of Appeal Judgment No. 154/2026, 24 April 2026

This is particularly interesting because the underlying financing was connected to a solar photovoltaic project.

The case involved several interest-rate swaps entered into in connection with refinancing a syndicated loan used for construction and operation of photovoltaic installations.

The claimant alleged, among other things:

• mistake of consent;
• inadequate information;
• failure to explain the risks;
• contractual liability.

The first-instance court found in favour of the claimant regarding the swaps, and the Madrid Court of Appeal confirmed the annulability for mistake concerning consent, while modifying the financial consequences and ordering restitution after appropriate set-off calculations.

Why this case is important for ESG banking

This is an unusually useful case for studying green-project finance + banking disputes.

The fact that the underlying project was renewable energy did not remove ordinary banking duties.

The court considered that:

operating in the renewable-energy sector does not automatically make a company an expert financial investor.

The judgment also stressed the importance of adequate information regarding complex financial products.

Legal lesson

A bank cannot assume:

“The borrower works in renewable energy, therefore it understands financial derivatives.”

Environmental expertise and financial sophistication are different things.

That distinction is highly important in ESG finance.

7. ESG and Bank's Duty of Information

Spanish banking disputes involving ESG products are likely to focus heavily on information duties.

For example, a bank selling a sustainability-linked product may need to explain:

Environmental component

• what qualifies as “green”;
• which taxonomy is being used;
• how emissions are calculated;
• what activities are excluded.

Social component

• labour-rights criteria;
• human-rights exclusions;
• social-impact measurements.

Governance component

• board standards;
• corruption exclusions;
• corporate-governance scoring.

8. ESG Misrepresentation

A financial institution could potentially face liability where it says:

“This fund invests only in sustainable companies.”

but the portfolio contains substantial investments inconsistent with the stated methodology.

Potential legal theories include:

Contractual liability

The customer may argue that the product failed to perform according to its contractual description.

Misrepresentation

The customer may allege that the sustainability representation induced the investment.

Consumer protection

If the investor is a consumer, unfair commercial-practice rules may become relevant.

Securities regulation

If the product is an investment product, disclosure and conduct-of-business requirements may apply.

Regulatory sanctions

The relevant supervisory authority may intervene where disclosure or conduct requirements are breached.

9. ESG Investment Funds

Spanish banks frequently distribute investment products created by:

• their own asset-management companies;
• third-party investment managers;
• insurance companies;
• European investment institutions.

An ESG dispute can therefore involve several parties.

For example:

Customer → Spanish Bank → Investment Manager → ESG Fund

If the fund's sustainability characteristics are incorrectly described, the dispute may concern whether responsibility rests with:

1. the fund manager;
2. the distributor;
3. the bank;
4. both the manufacturer and distributor.

10. ESG Green Bonds

Green bonds create another potential area of dispute.

Suppose a Spanish bank issues a green bond promising that proceeds will finance:

• renewable energy;
• energy efficiency;
• clean transport.

But proceeds are diverted to activities that do not satisfy the relevant green-bond framework.

Potential claims could involve:

• misrepresentation;
• breach of contractual commitments;
• securities-law violations;
• disclosure failures;
• regulatory enforcement;
• investor damages.

The seriousness increases because ESG information can influence the investment decision and price of the security.

11. Sustainability-Linked Loans

A sustainability-linked loan normally connects financial terms with sustainability performance.

Example:

The dispute may concern:

• who calculates the ESG performance;
• whether the KPI was objectively measurable;
• whether the borrower manipulated the data;
• whether the bank applied the interest adjustment correctly;
• whether the sustainability target was sufficiently precise.

The principles found in Spanish banking cases concerning transparency and informed consent become highly relevant.

12. ESG and Social Banking Disputes

The Social component of ESG is particularly important in retail banking.

Potential disputes include:

Financial exclusion

A bank refusing access to basic financial services.

Algorithmic discrimination

An automated credit system produces systematically worse results for a particular group.

Vulnerable consumers

Failure to adequately accommodate financially vulnerable customers.

Mortgage enforcement

Failure to properly apply statutory protections for vulnerable borrowers.

The Santander mortgage cases demonstrate that courts take consumer protection and effective remedies seriously.

13. ESG and Governance Liability

Governance is potentially the most important ESG issue for bank directors.

Boards may be expected to ensure:

• appropriate ESG risk policies;
• internal controls;
• reliable sustainability reporting;
• climate-risk management;
• compliance systems;
• appropriate disclosures;
• monitoring of greenwashing risk.

If an ESG failure produces substantial financial damage, questions may arise concerning:

• directors' duties;
• breach of fiduciary obligations;
• negligence;
• supervisory failures;
• regulatory liability;
• shareholder claims.

14. ESG Greenwashing and Directors

Suppose a bank's board approves a public statement claiming:

“90% of our financing supports the sustainable transition.”

If internal information demonstrates that the figure was materially inaccurate, possible issues include:

1. misleading investors;
2. misleading customers;
3. market-disclosure problems;
4. regulatory liability;
5. shareholder claims;
6. director responsibility.

Therefore ESG disclosure is increasingly becoming a corporate-governance issue rather than merely a public-relations issue.

15. Burden of Proof

In ESG financial litigation, evidence can become decisive.

Important evidence may include:

• ESG methodology;
• investment portfolio;
• internal compliance reports;
• board minutes;
• sustainability reports;
• external ESG ratings;
• contractual documents;
• customer communications;
• advertising;
• due-diligence reports;
• climate-risk assessments;
• internal emails.

The bank may need to demonstrate that its ESG claims were supported by a reasonable methodology.

16. Role of CNMV

The CNMV is particularly important where the dispute concerns:

• securities;
• investment firms;
• investment funds;
• financial product disclosure;
• market conduct;
• investor protection;
• ESG investment claims.

The CNMV maintains a jurisprudence database covering securities and financial-market matters.

17. Role of Banco de España

Banco de España's role is particularly important concerning:

• banking supervision;
• prudential risk;
• mortgage conduct;
• payment systems;
• banking customer protection;
• regulatory compliance.

A useful example of regulatory accountability is the Supreme Court's confirmation of a €485,000 Banco de España sanction against Banco Santander for serious breaches concerning the Code of Good Practices applicable to vulnerable mortgage debtors.

Although not an ESG case in the narrow environmental sense, it illustrates the Social + Governance dimensions of responsible banking.

18. ESG Litigation and Consumer Protection

A central principle emerging from Spanish and EU banking jurisprudence is:

Financial complexity does not eliminate the bank's duty of transparency.

This is especially important because ESG products often use technical terminology such as:

• carbon intensity;
• taxonomy alignment;
• principal adverse impacts;
• sustainable investment;
• transition finance;
• ESG score;
• KPI;
• sustainability performance target.

A consumer should not be expected to understand these concepts merely because they appear somewhere in a lengthy prospectus.

19. ESG Dispute-Resolution Mechanisms

An ESG-related financial dispute may proceed through several mechanisms.

1. Internal bank complaint

The customer first complains to the bank.

2. Customer ombudsman

Where applicable, the financial institution's internal complaints mechanism may be used.

3. Banco de España

Relevant for banking conduct matters.

4. CNMV

Relevant for investment and securities disputes.

5. Civil courts

Appropriate for contractual claims, damages, nullity and restitution.

6. Commercial courts

Particularly relevant for business-to-business greenwashing or unfair-competition litigation.

7. EU courts

National courts may refer questions concerning EU law to the CJEU.

20. Six Core Legal Principles Emerging from the Cases

The cases collectively demonstrate six important principles.

Principle 1 — ESG labels do not override ordinary banking law

Calling a product “green” or “sustainable” does not eliminate contractual duties.

Principle 2 — Transparency must be meaningful

Banco Santander and related CJEU jurisprudence demonstrate the importance of genuine consumer understanding.

Principle 3 — Financial sophistication matters

A company operating in renewable energy is not automatically a sophisticated derivatives investor, as illustrated by the 2026 Madrid case.

Principle 4 — Green claims can become litigation

The Iberdrola v Repsol litigation demonstrates that sustainability statements can be challenged under Spanish unfair-competition and advertising law.

Principle 5 — Consumer remedies must be effective

C-561/21 demonstrates the importance of ensuring that limitation rules do not deprive consumers of effective restitutionary remedies.

Principle 6 — ESG is increasingly a governance issue

Boards and senior management may ultimately bear responsibility for inadequate systems governing ESG disclosure and risk.

21. Case-Law Summary Table

22. Critical Legal Assessment

The Spanish position can therefore be described as an emerging ESG financial-dispute framework rather than a fully developed body of ESG banking case law.

The courts are currently reaching ESG disputes through existing legal doctrines:

ESG claim → transparency → consumer protection → contract law → securities law → unfair competition → regulatory compliance.

This is particularly important because many ESG disputes do not need a completely new “ESG cause of action.” Existing Spanish and EU legal principles can already provide remedies.

The 2025 Iberdrola v Repsol judgment demonstrates the developing judicial treatment of environmental claims, while the Santander mortgage jurisprudence demonstrates how transparency, fairness and effective remedies operate in financial contracts. The 2026 Madrid Court of Appeal decision involving renewable-energy financing and swaps is particularly useful for understanding that green-project finance remains subject to ordinary rules governing informed consent and complex financial products.

Conclusion

Banking Law and ESG-related financial disputes in Spain sit at the intersection of environmental regulation, financial regulation, consumer protection, contract law, securities law and corporate governance.

The principal future litigation areas are likely to include:

1. greenwashing by banks and investment firms;
2. misclassification of financial products as sustainable;
3. ESG investment-fund disputes;
4. green-bond disclosure failures;
5. sustainability-linked loan disputes;
6. climate-risk disclosure;
7. algorithmic discrimination in lending;
8. director liability for ESG governance failures;
9. misleading ESG advertising;
10. investor claims arising from inaccurate sustainability disclosures.

The most important doctrinal lesson is that ESG claims made by a financial institution must be accurate, sufficiently substantiated, transparent and consistent with the actual characteristics of the financial product. Where they are not, Spanish contractual, consumer, securities, advertising and unfair-competition rules can provide routes to judicial or regulatory relief.

Note: Several of the cases above are not “ESG cases” in the narrow sense. They are included because Spanish courts have not yet produced six substantial reported judgments specifically concerning ESG-labelled banking products; these cases establish the banking, transparency, consumer, governance and greenwashing principles that courts can apply to ESG financial disputes. The 2025 greenwashing judgment and 2026 renewable-energy financing judgment are the most directly ESG-connected examples.