This briefing from seven civil society groups (E3G, WWF, CDSB, CDP, ShareAction, ClientEarth, and Finance Watch) sets out six actions that the European Securities and Markets Authority (ESMA) should undertake, as part of its mandate to protect investors and avert financial instability, to facilitate the integration and management of climate and wider sustainability risks in financial markets.
The actions proposed are based on ESMA’s existing powers and on areas of its existing mandate. The briefing mainly focuses on ESMA but also touches upon the duties and roles of the other European Supervisory Authorities (ESAs).
Key actions include:
1. Initiate a review to assess oversight by competent authorities on reporting of climate and wider sustainability risk disclosures in issuer annual reports
2. Include climate and wider sustainability information in the draft Regulatory Technical Standards on electronic reporting
3. Include requirements for reporting on climate and wider sustainability risks in the guidelines on risk factors in prospectuses
4. Promote supervisory convergence for common regulatory and supervisory standards on climate and wider sustainability risk disclosures
5. Issue guidelines to CRAs to incorporate climate and sustainability risks into CRAs’ methodologies
6. Assess risks posed by climate and wider sustainability factors in securities market to include in quarterly Risk Dashboard and bi-annual Trend Risk and Vulnerability report