On 6 February 2020, the European Securities and Markets Authority (ESMA) announced its strategy on sustainable finance, setting out how the European Supervisory Authority will place sustainability at the core of its activities by embedding environmental, social and governance (ESG) factors at the forefront of its work.

The key priorities for ESMA highlighted in the strategy include:

  • completing the regulatory framework on transparency obligations via the Regulation on sustainability related disclosures in the financial services sector (the Disclosures Regulation). ESMA will work with the European Banking Authority and EuropeanInsurance and Occupational Pensions Authority to produce joint technical standards;
  • reporting on trends, risks and vulnerabilities (TRV) of sustainable finance by including a dedicated chapter in its TRV report, including indicators related to green bonds, ESG investing, and emission allowance trading;
  • analysing in further detail the financial risks stemming from climate change, including climate-related stress testing;
  • strengthening supervisory convergence across the EU on ESG factors with a focus on mitigating the risk of greenwashing, preventing mis-selling practices, and improving transparency and reliability in reporting non-financial information; and
  • participating in the EU platform on sustainable finance via the proposed Regulation on the establishment of a framework to facilitate sustainable investment that aims to develop and maintain the EU taxonomy and monitor capital flows to sustainable finance.

Annex 1 of the document provides an indicative timeline for actions on sustainable finance.