The European Securities and Markets Authority (ESMA) has published a second thematic note on sustainability-related claims, this time examining how market participants use ESG strategies in communications with investors.
The note focuses in particular on ESG integration and ESG exclusions, two approaches that are frequently referenced by financial market participants and widely used in marketing materials aimed at retail investors. ESMA said these terms can carry different meanings across the market, and that insufficient clarity around their use creates a material risk of greenwashing.
Rather than seeking to define ESG integration or ESG exclusions, the regulator said the objective of the note is to encourage firms to clearly explain what they mean when referring to such strategies, ensuring that sustainability-related claims are accurate, balanced and not misleading.
Building on its earlier thematic note on ESG credentials, the latest publication sets out practical do’s and don’ts for making sustainability claims. These are supported by concrete examples of good and poor practices, drawn from ESMA’s observations of current market behaviour.
