PORTUGAL Trends and Developments Contributed by: Ana Reis Mota, Rogério Alves & Associados Sociedade de Advogados SP, RL
Emerging ESG fraud risks Portugal’s Climate Framework Law (Law No 98/2021) introduces a comprehensive set of economic and financial instruments aimed at achieving climate neu - trality. Among these instruments, taxation plays an important role in facilitating the transition. The law mandates the government, mainly, to: • strengthen the application of the carbon tax; • promote more active taxation on the use of natural resources; and • introduce tax incentives for individuals and entities that purchase, consume, or utilise environmentally sustainable goods and services. These measures are designed to encourage envi - ronmentally responsible behaviour and reduce the ecological footprint. However, they also increase the risk of fraud, particularly in the context of grants and incentives linked to such tax benefits. In parallel, Decree Law No 57/2008 – recently amend - ed by Law No 10/2023 – establishes the legal frame - work for addressing unfair commercial practices in business to consumer relations. This includes the penalisation of misleading or deceptive conduct. At EU level, Directive (EU) 2024/825 further amends the Unfair Commercial Practices Directive (2005/29/EC) to directly target greenwashing by: • prohibiting generic environmental claims such as “green”, “environmentally friendly” or “climate neu - tral” unless they are backed by excellent, recog - nised environmental performance; and • banning claims that a product is climate neutral, climate positive or has a reduced climate impact when such claims rely solely on offsetting green - house gas emissions outside the product’s value chain. For instance, falsely advertising a company’s com - mitment to decarbonisation may constitute an unfair commercial practice, as it can significantly distort consumer decision-making. Under the new EU rules, unsubstantiated assertions of decarbonisation, envi - ronmental neutrality or ethical sourcing are increasing - ly likely to be viewed not merely as unfair commercial
practices, but also as potential fraudulent misrepre - sentation in both civil and criminal contexts. At the same time, the Corporate Sustainability Report - ing Directive (CSRD) and its subsequent amendments have introduced detailed and phased-in obligations for large undertakings and listed SMEs to disclose verifiable ESG data, with some reporting deadlines deferred by two years to ease compliance burdens while preserving the core transparency objectives. Therefore, companies making unsubstantiated claims about environmental sustainability or ethical sourcing are subject to heightened scrutiny. Portuguese com - panies that publish aggressive sustainability claims without robust, auditable support face increased exposure not only to regulatory enforcement and con - sumer protection actions, but also to fraud, market abuse and director liability claims where ESG disclo - sures prove materially misleading. This reflects a broader shift within the European Union, particularly under the CSRD, the EU sustaina - ble finance framework and the new consumer protec - tion rules on green claims. These frameworks require Portuguese companies to provide verifiable environ - mental, social and governance (ESG) data. Failure to do so – especially where data is falsified – may expose companies to liability for fraud and reputational dam - age. 2026 and beyond – legislative modernisation Artificial intelligence and legal automation As of 2026, Portugal still lacks a comprehensive national statute exclusively regulating the use of AI. However, the legal landscape has changed signifi - cantly with the adoption of the EU Artificial Intelligence Act – Regulation (EU) 2024/1689, which establishes harmonised rules for AI systems across the Union. The AI Act will apply in stages, with prohibitions on cer - tain unacceptable uses and obligations for high-risk AI systems and general-purpose AI models progressively taking effect between 2025 and 2027. For Portugal, this means that, even in the absence of a standalone national AI Act, courts, regulators and market participants will need to comply directly with the AI Act, particularly in sectors where AI systems
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