ESMA provides insights into the expected sustainability disclosures in prospectuses

ESMA has issued a Public Statement regarding the expected sustainability disclosures in prospectuses. The statement outlines ESMA’s expectations on how specific disclosure requirements related to sustainability matters in equity and non-equity prospectuses should be met considering the ESG transition.
The main objectives of this statement are to ensure a coordinated approach by NCAs in scrutinizing sustainability-related disclosures, provide issuers and advisors with an understanding of disclosure expectations, and support informed investment decisions for investors considering sustainability-related matters.
The key points of ESMA’s statement are as follows:
– Expected ESG disclosure in prospectuses: ESMA emphasizes the importance of an issuer’s non-financial reporting and future sustainability reporting under the CSRD, as they may be material under the PR. The statement also clarifies disclosure requirements for non-equity securities advertised as having specific ESG components or pursuing ESG objectives, such as ‚use of proceeds‘ bonds and ’sustainability-linked‘ bonds.
– Consistency with non-financial reporting: To ensure consistency, issuers should include material sustainability-related disclosures published in their non-financial reporting in equity prospectuses.
– Sustainability-linked bonds: For prospectuses relating to sustainability-linked bonds, ESMA expects disclosures about KPIs, SPTs, and issuer sustainability strategies.
– Consistency in disclosures: ESMA highlights the importance of consistency between sustainability-related disclosures in advertisements and prospectuses, stating that if the disclosure is material, it should be included in the prospectus.
ESMA will continue to monitor the market and may modify the guidance based on new product introductions or changes in legislation. The statement aims to promote transparency and accountability in sustainability-related disclosures in prospectuses, thereby supporting sustainable finance initiatives.