September 30, 2021

Sustainable finance, environmental, social and governance rules to be key components in European securities regulation

On September 28, 2021, the European Securities and Markets Authority issued its Annual Work Programme (AWP) for 2022, which sets out the regulator’s priority work areas for the coming year.  Sustainable finance – notably the development of rules on environmental, social and governance disclosures, and the prevention of greenwashing – figures prominently among the key work streams described in the AWP.

ESMA’s work in the area of ESG and sustainable finance is based on both the European Commission’s Renewed Sustainable Finance Strategy, and ESMA’s Sustainable Finance Strategy.  The primary tasks for 2022 will be the development of rules governing ESG disclosures, the establishment of common approaches among national regulatory authorities, and the elaboration of risk identification methodology related to ESG factors. 

In particular, ESMA will seek to ensure that ESG factors are taken into account in regulatory initiatives such as the EU Green Bonds Regulation, the Corporate Sustainability Reporting Directive, and the regulation of sustainability-related disclosures in the financial services sector, and that rules involving ESG elements be applied consistently throughout the European Union.  To this end, ESMA intends to implement a roadmap for supervisory convergence to guide authorities in the areas of asset management and issuer disclosures, among others.  Another area covered by ESMA’s initiatives will be a study of greenwashing, its significance, its risks, and its prevention.  ESMA’s wide-ranging plans to address ESG issues also include direct supervision of the incorporation of ESG factors by credit rating agencies, and cooperation in the international arena.

The 2022 AWP also envisages continued efforts in ESMA’s traditional areas of enhancing investor protection and promoting stable financial markets, in addition to sustainable finance and innovation and digitalization.

ESMA Press ReleaseESMA 2022 Annual Work Programme