ESMA’s Sustainable Finance Roadmap 2022-2024

ESMA’s Sustainable Finance Roadmap (SFR) builds on its Strategy on Sustainable Finance (SSF) established in February 2020, and identifies priority areas and related actions in sustainable finance for the period 2022 - 2024.

Broadly, the following three priority areas are identified:

Priority 1
Priority 2
Priority 3

Priority 1

Tackling greenwashing and promoting transparency

We have seen how the focus on sustainable or impact investing and the pace at which markets are evolving is creating potential for greenwashing which can occur at different steps of the investment chain. Accordingly, ESMA is focusing on investigating the issue, defining its fundamental features and tackling greenwashing by finding common cross-border solutions.

Priority 2

Building NCAs’ and ESMA’s capacities

The drive towards sustainable finance undoubtedly requires ESMA and national competent authorities (NCAs) to develop skills in non-traditional focus areas to be better equipped to understand and address supervisory implications of new regulation and of new market practices, mainly through:

a multi-year training programme, and
facilitating the sharing of supervisory experiences among NCAs.

Priority 3

Monitoring, assessing and analysing ESG-related markets and risks

Investor protection and financial market stability remain the overarching objectives. Accordingly, close monitoring of emerging trends, risks, and vulnerabilities will remain a priority. ESMA intends to leverage on its data analytic capabilities to support its, and the NCAs, supervisory work as well as to promote a convergent approach among NCAs. Specific activities mentioned in the SFR include:

1. climate scenario analysis for investment funds

2. CCP stress testing and

3. establishing common methodologies for risk analysis with other European Supervisory Authorities and other EU institutions and bodies such as the ECB and the European Environment Agency and, where relevant, with international standard-setting bodies.

The Roadmap is just another indication that there no sign of a let up in the pace at which ESG related EU regulatory developments are coming at us and it is therefore crucial for all stakeholders to remain up to date.