The European Securities and Markets Authority has published two thematic notes providing practical guidance on sustainability-related impact and climate transition claims across financial instruments.
Clarity Requirements for Impact Claims
The European Securities and Markets Authority (ESMA) has released two thematic notes covering sustainability-related claims within financial markets. The publications focus specifically on positive impact claims and climate transition claims made in relation to investment funds, bonds, and benchmark indices.
Market participants maintain varied interpretations of positive environmental or social impact and apply different ambition levels to their claims. To ensure investors receive balanced information, ESMA encourages market entities to explain clearly what difference they plan to make, how they intend to generate positive impact, and the methods used to measure outcomes.
Managing Transition Claims and Reducing Greenwashing Risks
The note addressing climate transition claims highlights that such assertions are typically forward-looking and depend on external factors, assumptions, and future developments. ESMA stresses the necessity of transparently communicating transition ambitions, implementation plans, progress assessment frameworks, data limitations, and key dependencies.
These thematic notes offer concrete examples of good and poor practices in non-regulatory communications to assist firms in maintaining clear, fair, and non-misleading disclosures. The guidance builds upon ESMA's earlier work on ESG credentials and strategies, aiming to reduce greenwashing risks without creating new regulatory obligations or prescribing formal ambition levels under the Sustainable Finance Disclosure Regulation.
