27 October 2022
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is changing its Union Strategic Supervisory Priorities (USSPs) to include ESG disclosures alongside market data quality. The new priority of ESG disclosures replaces costs and performance for retail investment products and represents an important step in the implementation of the ESMA Strategy, which gives a prominent role to sustainable finance.
ESMA and the National Competent Authorities (NCAs) intend to accompany the growing demand for ESG-related financial products. We will foster transparency and comprehensibility of ESG disclosures across key segments of the sustainable finance value chain such as issuers, investment managers or investment firms and, hence tackle greenwashing.
In addition, ESMA aims to gradually promote an increased scrutiny on ESG disclosures through effective and consistent supervision. This also implies building supervisory capabilities to fully embed sustainable finance into daily supervisory work and supervisory culture. ESMA and the NCAs will therefore take active steps to protect investors and facilitate investments in a credible ESG market.
In the context of the second USSP, market data quality, ESMA has already developed and applied common methodologies and thematic reviews. Both ESMA and NCAs will continue to engage into further targeted and concerted supervisory work.
Regarding costs and performance for retail investment products, ESMA and the NCAs carried out extensive actions such as:
- Common Supervisory Action (CSA) on costs and fees under the UCITS framework;
- CSA on information on MiFID II costs and charges;
- Mystery shopping exercise (with some NCAs);
- CSA on MiFID II suitability requirements and product governance;
- Interpretative aids (Guidelines, Q&As);
- Draft regulations and technical advice; and
- Annual Statistical Report monitoring costs’ performance.
The USSPs are an important tool through which ESMA coordinates supervisory action with NCAs on specific topics. The aim is to provide a structured and comprehensive response to address key market risks across the EU. NCAs are required to take these Priorities into account when drawing up their work programmes.
Next steps
ESMA and NCAs will continue working together in the areas of ESG disclosures and market data quality. At the same time, ESMA and NCAs will follow-up on the previous work, namely monitoring closely the evolution of costs as a key element for investors protection.