The European Securities and Markets Authority (ESMA) has published the findings of its 2023–2024 Common Supervisory Action (CSA), conducted jointly with National Competent Authorities (NCAs), on the integration of sustainability risks and disclosures within the EU’s investment management sector.
While ESMA reported an overall satisfactory level of compliance with the existing regulatory framework, the review identified several areas requiring improvement—particularly in how asset managers integrate sustainability risks and in the quality of both entity-level and product-level disclosures under the Sustainable Finance Disclosure Regulation (SFDR).
The CSA aimed to assess the alignment of investment firms with key sustainability regulations, including the SFDR, the Taxonomy Regulation, and relevant provisions under the UCITS and AIFMD frameworks. Over the two-year period, NCAs collaborated closely, sharing supervisory practices and insights to foster greater convergence across the EU.
The supervisory exercise led to the identification of several regulatory breaches, which were subsequently addressed by the entities concerned.
Looking ahead, ESMA plans to continue facilitating dialogue among national regulators on sustainability risk oversight. The agency also encourages NCAs to maintain active engagement with market participants and to follow up on identified vulnerabilities to strengthen compliance and transparency in sustainable finance.
