ESMA provides guidance to supervisors for sustainability

The European Securities and Markets Authority (ESMA) has released a Supervisory Briefing, aimed at ensuring convergence across the EU in the supervision of investment funds with sustainability features.

It hopes this will help combat greenwashing by establishing common supervisory criteria for National Competent Authorities (NCAs), to effectively supervise investment funds with sustainability features.

In the briefing, it offers guidance for the supervision of fund documentation and marketing material, as well as guiding principles on the use of sustainability-related terms in funds’ names.

Furthermore, it gives guidance for convergent supervision of the integration of sustainability risks by AIFMs and UCITS managers

As for the next steps, ESMA plans to work with NCAs to combat greenwashing by promoting more supervisory convergence in supervising investment funds with sustainability features. Part of this could include updating the supervisory briefing.

recent study found that 77% of financial firms plan to hire an ESG specialist as they prepare for the UK’s new rules on sustainable investments to come into effect, according to a report from FT Adviser.

Earlier this week, ESMA published a report on the Common Supervisory Action (CSA) on costs and fees for investment funds, that was carried out with National Competent Authorities (NCAs) during 2021.

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