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ESMA Publishes its Strategy On Sustainable Finance

The European Securities Market Authority (ESMA) has published its Strategy on Sustainable Finance.

The ESMA will place sustainability at the core of its activities by embedding Environmental, Social, and Governance (ESG) factors in its work. Other terms for ESG that have been used are sustainability reporting and triple bottom line.

Triple bottom line is a term that was coined in the 1990's by John Elkington. Basically it means that organizations should not be measured by financial performance along, but rather on financial performance, social performance, and environmental performance.  The ideas have been tuned over the past 30 years.

Key priorities per the ESMA include: 

  • completing the regulatory framework on transparency obligations via the Disclosures Regulation. ESMA will work with the EBA and EIOPA 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;
  • using the data at its disposal to analyse financial risks from climate change, including potentially climate-related stress testing in different market segments;
  • pursuing convergence of national supervisory practices on ESG factors with a focus on mitigating the risk of greenwashing, preventing mis-selling practices, and fostering transparency and reliability in the reporting of non-financial information;
  • participating in the EU Platform on Sustainable Finance that will develop and maintain the EU taxonomy and monitor capital flows to sustainable finance; and
  • ensuring ESG guidelines are adhered to in the entities that ESMA supervises directly, while being ready to accept any new supervisory mandates related to sustainable finance.

Great job ESMA!

Posted on Monday, February 10, 2020 at 07:13AM by Registered CommenterCharlie in | CommentsPost a Comment

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