01 June 2022

ESMA: Supervisory briefing Sustainability risks and disclosures in the area of investment management

One of ESMA’s statutory objectives is to enhance supervisory convergence across the internal market, by playing an active role in building a common supervisory culture and promoting common supervisory approaches and practices.

9. Sustainable investment is a fast-growing area of investment management and
the subject of ambitious new Union rules on disclosure and sustainability risk
integration. ESMA has developed this supervisory briefing to promote
convergence on the supervision of sustainability-related disclosures as well as
the supervision of how fund managers integrate sustainability risks in their
organisational framework and decision-making process. The supervisory
briefing aims to provide guidance to NCAs regarding the supervision of
sustainability-related disclosures and integration of sustainability risks.
10. The supervisory briefing is issued under Article 29(2) of the ESMA Regulation
which enables ESMA to develop new practical instruments and convergence
tools such as supervisory briefings. The purpose of these tools is to promote
common supervisory approaches and practices. The content of this supervisory
briefing is not subject to any ‘comply or explain’ mechanism for National
Competent Authorities (NCA) and is non-binding.
11. The supervisory briefing is designed around a risk-based approach to
supervision, meaning that the intensity and frequency of the sustainability
related supervision of investment funds are determined based on the
assessment of the risks affecting these funds. This refers to the whole set of
procedures, processes, mechanisms and practicalities allowing competent
authorities to exercise their supervisory powers in a way that is commensurate
with the identified risks.
12. Competent authorities are encouraged to be proportionate in their supervision.
The extent of information sought, and the frequency and intensity of supervisory
engagement should consider elements such as the type of assets the fund
manager intends to invest in, the complexity of the investment policy and
strategy of the fund and the type of investors in the investment fund. The
engagement should also be commensurate with the risks identified 13. The content of this briefing is not exhaustive and does not constitute new policy.
It has been designed to be used in the way that best fits with supervisors’
methodologies, and may be updated to reflect regulatory developments or
supervisory experiences.
14. This briefing is developed in relation to the following regulations and documents:
- Regulation (EU) 2019/2088 (SFDR);
- Regulation (EU) 2020/852 (TR);
- Regulation (EU) 2017/1129 (Prospectus Regulation)
- Regulation (EU) 2019/1156 (Cross-border distribution of funds)
- Directive 2011/61/EU – AIFM Directive
- Directive 2009/65/EC – UCITS Directive (as amended)
- Commission Delegated Regulation (EU) 231/2013 (AIFMD) and the
Commission Delegated Regulation 2010/43/EU (UCITS) as amended by
Commission Delegated Regulation (EU) 2021/1255 and Delegated
Directive (EU) 2021/1270
- Commission Delegated Regulation (EU) .../... (SFDR Delegated
Regulation)45
- Updated Joint ESA Supervisory Statement on the application of the
Sustainable Finance Disclosure Regulation (JC 2022 126);
- Guidelines on marketing communications under the Regulation on cross-
border distribution of funds (ESMA34-45-12727); and
- Questions related to Regulation (EU) 2019/2088 of the European
Parliament and of the Council on 27 November 2019 on sustainability-
4 Commission Delegated Regulation (EU) .../... of 6 April 2022 supplementing Regulation (EU) 2019/2088 of the European
Parliament and of the Council with regard to regulatory technical standards specifying the details of the content and presentation
of the information in relation to the principle of ‘do no significant harm’, specifying the content, methodologies and presentation of
information in relation to sustainability indicators and adverse sustainability impacts, and the content and presentation of the
information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in
precontractual documents, on websites and in periodic report
5 Any reference in the document to the checks that NCAs should perform on the compliance with the SFDR Delegated Regulation
should be intended to be applicable when such CDR enters into force.
6 Updated supervisory statement on the application of the SFDR
7 Guidelines on marketing communications

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