The European Securities and Markets Authority (ESMA) has published its Sustainable Finance Roadmap 2022-2024.
Building on ESMA’s 2020 Strategy on Sustainable Finance, the roadmap sets out the regulator’s deliverables on sustainable finance and how they will be implemented over the next three years.
It identified the challenges of tackling greenwashing and promoting transparency as its number one priorities for the roadmap.
Greenwashing is a complex and multifaceted issue which takes various forms, has different causes and has the potential to detrimentally impact investors looking to make sustainable investments, according to ESMA.
Investigating this issue, defining its fundamental features and addressing it with coordinated action across multiple sectors, and finding common solutions across the EU, will be key to safeguarding investors.
The second priority listed in the roadmap is to build the expertise and capacity of national regulators, and ESMA itself, in the sustainable finance field. This will involve a multi-year training programme and measures to facilitate the active sharing of supervisory experiences among National Competent Authorities (NCAs).
Thirdly, ESMA will focus on monitoring, assessing and analysing environmental, social, governance (ESG) markets and risks.
ESMA will undertake specific activities such as climate scenario analysis for investment funds, central counterparty (CCP) stress testing and the establishment of common methodologies for climate-related risk analysis together with other public bodies.
The EU securities markets regulator will address its three priorities with a comprehensive list of actions across the following sectors: investment management, investment services, issuers’ disclosure and governance, benchmarks, credit and ESG ratings, trading and post-trading, and financial innovation.
Speaking on the roadmap, Verena Ross, chair at ESMA, comments: “Advancing the sustainability agenda is crucial for ESMA, particularly as investor preferences shift to environmentally friendly financial products and the EU strives to meet its commitments on tackling climate change.
“The Roadmap is a milestone for our sustainable finance work, identifying the priority work we will do to ensure that ESMA and national supervisors take ambitious action on priority sustainable finance issues. I am confident that ESMA’s actions will play a key role in contributing to the European Green Deal and in protecting European investors on this journey.”
