ESMA promotes clarity in claims on impact and transition
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ESMA publishes two new thematic notes against greenwashing: one on positive impact claims in funds and bonds and another on climate transition claims. They offer practical do's and don'ts and examples of good and poor practice so that such communications are clear, fair and not misleading.
Key points
- Impact: explain intentionality, additionality and how results are measured, without conflating investor impact with investee impact.
- Objectives that are too broad (for example generic references to the SDGs) and vague or missing theories of change are observed.
- Transition: clarify the ambition, how it will be implemented and how progress will be reported, with assumptions and data limitations.
- They create no new obligations and do not pre-empt the SFDR review.
Who is affected
Fund managers, issuers of green, social and sustainability-linked bonds, benchmark administrators and distributors.
Plain-language version
If a fund or bond claims to make the world better or help the climate transition, it has to prove it. That is the message from ESMA, the EU's stock market watchdog, in two new guides against greenwashing, passing something off as green when it is not. It found goals that were too vague and unclear explanations of how impact is achieved. Useful if you invest in sustainable products.
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Summary produced with artificial intelligence from the official publication. It may contain errors: always check the original document.
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