SFDR/ESG: CSSF update on the launch of the ESMA CSA

On 6 July 2023, ESMA announced the launch of a CSA with national competent authorities (NCAs) across the European Union on the integration of sustainability risks and disclosures.

What is the purpose of this CSA?

The CSA has a dual purpose:

• to investigate how UCITS managers and AIFMs comply with the SFDR, Taxonomy Regulation and the relevant implementing measures, and

• to foster transparency and convergence in the NCAs supervision of sustainability-related disclosures, by

  • assessing whether marketing participants adhere to the applicable rules and standards in practice;

  • gathering information on greenwashing risks in the investment management sector, and

  • identifying further relevant supervisory and regulatory intervention to address the issue.

In addition, the CSA will relate to the principles in the ESMA Supervisory Briefing on sustainability risks and disclosures in the area of investment management published in May 2022 (the Briefing). The Briefing sets out guidance for compliance with the SFDR and Taxonomy Regulation for NCAs in order to minimise risks of varying levels of investor protection and greenwashing.

What's new?

On 29 August 2023, the CSSF emailed the Luxembourg-based asset managers that are in the scope of this CSA. Asset managers that did not receive an email from the CSSF are not included in this exercise.

What's next?

A two-stage process will begin, where:

• in the first stage, NCAs will request asset managers to complete a questionnaire focusing more closely on greenwashing risks;

• in the second stage, NCAs will request asset managers to complete a questionnaire dedicated to the integration of sustainability risks and factors in the organisational arrangements of asset managers and to the transparency disclosures at manager and product level.

Technical information and deadlines will be shared with the selected entities on a bilateral basis.