ESG: ESMA’s first thematic note on sustainability related claims

On 1 July 2025, ESMA published a Thematic Note on clear, fair and not misleading sustainability-related claims (the Note).

The Note focuses on ESG credentials and

• clarifies ESMA's expectations towards market participants (primarily, issuers, fund managers, benchmark administrators and investment service providers) when making sustainability claims

• leverages off the core characteristics of greenwashing in ESMA's Progress Report on Greenwashing (May 2023)

• builds on four principles for making sure sustainability claims avoid the risk of greenwashing by being clear, fair, and not misleading and

• sets out a number of do's and don'ts, illustrated by examples of good and bad practices, where claims are made about

  • all forms of ESG credentials

  • industry initiatives

  • labels and awards and

  • comparisons to peers

Further thematic notes may follow ('as judged necessary'), dealing with different issues - these should be read together as a thematic study.

The four principles

The principles apply to non-regulatory oral and written communications (i.e., marketing materials and information not covered by specific disclosure requirements) and reinforce the responsibility market participants have only to make claims that are clear, fair and not misleading,

The principles are not intended to create new disclosure requirements.

1. Accurate

Among other things, sustainability claims should

• fairly and accurately represent the entity's sustainability profile, and/or that of its financial products, without exaggeration and consistently across all communications.

• be precise and be based on all relevant positive and negative aspects

• avoid omission and cherry-picking.

ESG terminology and non-textual imagery used should be consistent with the entity's or product's sustainability profile and should not overshadow other contents.

2. Accessible

Sustainability claims should be

• based on easily accessible information

• easy to browse

• at an appropriate level of detail so they are understandable

• easy to understand but not over-simplistic.

For electronic documents, if more explanation is desirable but there isn't enough space, information could be presented in layers.

3. Substantiated

Sustainability claims should

• be substantiated with clear and credible reasoning, facts and processes, based on fair, proportionate and meaningful methodologies

• make available any limitations in the information, data or metrics that a claim relies on

Comparisons should make clear what is being compared and how the comparison is made.

4. Up to date

Sustainability claims should

• be based on up to date information

• disclose any material change in a timely manner.

It could be useful to make clear the date and perimeter of any analysis.

Sustainability claims on ESG Credentials

ESG credentials, which include qualifications, labels, ratings and certificates, can be misleading in a number of ways - for instance, by overstating the significance of having a given label, of receiving an ESG award or of being signatory to a voluntary framework.

The Note provides a number of do's and don'ts as well as examples of good and poor practices for each.

Market participants should familiarise themselves with these, which include the following

(a) Claims about all forms of ESG credentials

Do

• clarify how the criteria for the ESG credential are met, measured and monitored and how they are material for the ESG profile of the product or entity

• provide details of the entity which is offering the credential and clarify whether it monitors the implementation of related targets from time to time.

Don't

• reference ESG credentials for products that do not take sustainability into account

• exaggerate the meaning of a credential

• cherry-pick where you have several sources for a given credential.

(b) Claims about industry initiatives

Do

• clarify what it means to belong to the initiative and whether it requires delivering on any targets

• give all information relevant for an investor to understand the meaning of a rating where the initiative results in external ratings based on self-reported information.

Don't

• continue to reference the initiative after the entity or product has left it

• cherry-pick information provided on what it means to be a signatory.

(c) Claims about labels and awards

Do

• make clear if a label's underlying criteria focus purely on having processes in place or if they also require delivering on specific sustainability outcomes

• clarify any potential conflict of interest or payment of fees when using a credential attributed by an entity that might also sell paid services

• say when an ESG award was given and the period to which it relates.

Don't

• use regulatory disclosures (e.g., SFDR product-level disclosures) as labels or give the impression that SFDR designations are credentials

• say that a product which is not subject to certain regulatory disclosures (e.g. Article 8 / Article 9 of SFDR) is compliant with those disclosures.

(d) Claims about comparisons to peers

Do

• clarify the basis of the statement when comparing your entity or product to competitors

• try to ensure that the peers' selection is fair and meaningful

• reference products only when they promote ESG characteristics or have a sustainable objective.

Don't

• compare your entity/product to others without disclosing the source of the information and the key assumptions being used

• create internal ESG classifications without ensuring these are in line with the sustainability profile of the products in question.