What Changed
- ESMA published guidance on positive impact claims in funds and bonds, encouraging clear explanations of intended outcomes, generation strategies, and measurement metrics.
- ESMA issued guidance on climate transition claims across funds, bonds, and benchmarks, emphasizing transparent disclosure of ambitions, progress assessment, data limitations, and assumptions.
- The thematic notes establish non-binding do's and don'ts based on observed market practices without introducing new regulatory requirements or altering the SFDR review.
Market participants, fund managers, bond issuers, and financial entities operating within or issuing products into the European Union are affected by new non-regulatory guidance published by the European Securities and Markets Authority (ESMA). ESMA, the EU's financial markets regulator and supervisor, has released two thematic notes designed to provide clarity on sustainability-related claims, specifically addressing positive impact and climate transition statements.
The first thematic note focuses on positive environmental or social impact claims made through funds and bonds. Recognizing that market participants interpret impact differently and maintain varying levels of ambition, ESMA encourages entities to clearly explain the specific difference they expect to achieve, how they plan to generate positive impact, and the methodologies used to measure results, ensuring investors receive balanced and clear information.
The second thematic note concentrates on climate transition claims made across funds, bonds, and benchmarks. Because transition claims are forward-looking and subject to future uncertainty, ESMA highlights the necessity of transparently communicating transition ambitions, implementation plans, and assessment metrics. Entities should clearly disclose relevant underlying assumptions, data limitations, and external dependencies.
Importantly, these thematic notes do not create new regulatory requirements, nor do they prescribe a specific level of ambition under ongoing regulatory reforms such as the Sustainable Finance Disclosure Regulation (SFDR) review. Instead, they provide practical "do’s and don’ts" based on observed market practices, alongside concrete examples of good and poor communications. The guidance supports adherence to the existing regulatory principle that communications must be clear, fair, and not misleading, thereby reducing greenwashing risks across EU financial markets.
Who May Be Affected
Financial market participants, fund managers, bond issuers, and entities promoting ESG, positive impact, or climate transition financial instruments in the EU.
Cross-Border Context
Applies to financial institutions within the EU as well as foreign entities marketing sustainability-related investment products to EU investors.
What to check next
- Review the specific thematic notes on ESMA's official website for detailed examples of good and poor practice.
- Monitor ongoing developments regarding the Sustainable Finance Disclosure Regulation (SFDR) review.
This article provides general information and does not constitute legal advice. Consult the official text and obtain advice appropriate to your circumstances where needed.