ESMA, NCAs Evaluate Fund Disclosures & Risks
The European Securities and Markets Authority (ESMA), the regulatory body responsible for overseeing financial markets in the EU, is embarking on a collaborative initiative known as the Common Supervisory Action (CSA) alongside National Competent Authorities (NCAs).
The aim of this undertaking is to evaluate how asset managers under their supervision comply with sustainability-related disclosure requirements and integrate sustainability risks.
In order to achieve this objective, ESMA has devised a standardised approach that will enable NCAs to exchange knowledge and insights, thereby fostering harmonisation in the supervision of sustainability disclosures.
The key objectives of this initiative are as follows:
Assessing the practical adherence of market participants to relevant rules and standards.
Gathering additional information to identify and mitigate the risks associated with greenwashing in the investment management sector.
Identifying potential regulatory interventions and supervisory measures to effectively address the issue.
Enhancing consistency in the oversight of misleading and inaccurate disclosures is pivotal to promoting transparency, and it has been designated as one of the primary strategic priorities for NCAs. By implementing the CSA, the comprehensibility of environmental, social, and governance (ESG) disclosures made by asset managers across various stages of the sustainable finance value chain will be improved. Moreover, the initial findings regarding the identification of greenwashing risks at both entity and product levels will inform ESMA's Final Report on the subject.
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