The European Securities and Markets Authority (ESMA), the European Union’s financial markets regulator and supervisor, has published two new thematic notes providing practical guidance on sustainability-related claims made by market participants.
The publications focus specifically on positive impact claims and climate transition assertions, offering practical “do’s and don’ts” for non-regulatory communications across funds, bonds, and market benchmarks to reduce greenwashing risks.
The guidance builds upon earlier ESMA publications covering corporate ESG credentials and strategies, aiming to ensure market communications remain fair, clear, and not misleading.
Key regulatory recommendations and market observations include:
- Impact claims clarity: Financial market participants making environmental or social impact claims are urged to explicitly define their ambition, methodology, and measurement frameworks to eliminate divergent investor interpretations.
- Transition forward-looking risk: Recognizing that climate transition claims depend on future operational assumptions and external factors, ESMA emphasized the need for clear communication regarding implementation plans, data limitations, and progress metrics.
- Non-binding supervisory framework: The thematic notes do not establish new legal obligations or alter the ongoing review of the Sustainable Finance Disclosure Regulation (SFDR), serving instead as practical benchmarks under existing disclosure principles.
- Observed market practice alignment: The guidance uses real-world examples of effective and poor disclosure practices to assist asset managers and debt issuers in aligning marketing materials with supervisory expectations.
ESMA stated that transparent, well-substantiated sustainability disclosures are essential to maintaining investor confidence and fostering consistency across EU capital markets.
