ESG: ESMA launches a CSA into disclosures and sustainability risks

On 6 July 2023, ESMA announced that it was launching a Common Supervisory Action (CSA) with EU National Competent Authorities (NCAs) on sustainability-related disclosures and the integration of sustainability risks.

What is the CSA going to look at?

The aim of the CSA is two-fold:

• to assess how asset managers are complying with the relevant provisions in the Taxonomy Regulation, the SFDR and applicable Level 2 measures (including those that amended the UCITS and AIFMD on the integration of sustainability risks – see here) and
• to foster convergence in how the NCAs supervise sustainability related disclosure, in particular
  • assessing whether market participants in practice adhere to the applicable rules and standards
  • gathering further information on greenwashing risks in the investment management sector and
  • identifying any other supervisory or regulatory intervention needed to address the issue.

ESMA’s findings on identifying greenwashing risks at both the entity and product level will be used to inform its Final Report on greenwashing.

Next steps?

The CSA will run until Q3 2024.

We will be tracking what, if any, further work comes about as a result of its findings.