Europe’s securities markets regulator will focus on transparency obligations and convergence of national supervisory agencies regarding sustainable finance.
The European Securities and Markets Authority (ESMA) has released its strategy on sustainable finance. Its strategy outlines how the regulator will place sustainability at the core of its activities and embed environments, social and governance (ESG) factors into its work.
There are a number of priorities the regulator has indicated in the strategy spanning transparency obligations, risk analysis on green bonds, ESG investing, convergence of national supervisory practices on ESG factors, taxonomy, and supervision.
One of its main priorities is to complete the regulatory framework on transparency obligations through the disclosures regulation. ESMA will work with the European Banking Authority (EBA) and European Insurance and Occupational Pensions Authority to produce joint technical standards.
Another priority will be reporting on trends, risks and vulnerabilities (TRV) of sustainable finance by including a dedicated chapter in its TRV Report, indicators on green bonds, ESG investing and emission allowance trading.
ESMA will also use the data at its disposal to analyse financial risks from climate change, as well as develop an EU taxonomy on sustainable finance.
Finally, the regulator will seek convergence of national supervisory practices on ESG factors with a focus on mitigating the risk of greenwashing, stopping mis-selling practices and fostering transparency.
ESMA chair Steven Maijoor said, “The financial markets are at a point of change with investor preferences shifting towards green and socially responsible products, and with sustainability factors increasingly affecting the risks, returns and value of investments.
“ESMA, with its overview of the entire investment chain, is in a unique position to support the growth of sustainable finance while contributing to investor protection, orderly and stable financial markets.”
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