ESMA's Insights: Sustainability in Prospectuses
The European Securities and Markets Authority (ESMA), the regulatory body for EU financial markets, has issued a Public Statement outlining the expected sustainability disclosure in prospectuses.
This statement guides how the disclosure requirements of the Prospectus Regulation should be met in relation to environmental, social, and governance (ESG) matters.
The objectives of this guidance are to ensure coordinated scrutiny by national competent authorities, assist issuers in meeting disclosure expectations, and support informed investment decisions based on sustainability-related information.
ESMA emphasises the significance of non-financial reporting and future sustainability reporting under relevant directives, as this disclosure may be material and included in prospectuses.
The statement also provides clarification on the required disclosure for non-equity securities, such as bonds that consider specific ESG components or pursue ESG objectives, including 'use of proceeds' bonds and 'sustainability-linked' bonds.
Furthermore, the Public Statement addresses the issue of sustainability-related disclosure being present in advertisements but not in prospectuses, emphasising that if such disclosure is material under the Prospectus Regulation, it should be included in prospectuses.