EU markets regulator the European Securities and Markets Authority (ESMA) announced today the publication of its expectations for sustainability-related disclosures in equity and non-equity prospectuses.

The regulator said that the guidance is aimed at supporting investors’ ability to make informed investment decisions, providing issuers with an understanding of disclosures regulators will expect them to provide, and ensuring a coordinated approach towards scrutinizing sustainability-related disclosures by national competent authorities (national-level regulatory authorities, or NCAs).

Among the guidelines included in ESMA’s statement is an expectation for issuers to provide the basis for any statements concerning their sustainability profile, such as referring to underlying data or assumptions, detailing specific market standards or labels, or referencing third party research or analysis.

For equity prospectuses, the statement expects inclusion of reporting in accordance with the Non-Financial Reporting Directive (NFRD), the current EU sustainability reporting framework, or its upcoming update, the Corporate Sustainable Reporting Directive (CSRD), to the extent that the disclosures are material.

The statement also includes guidance for prospectuses for “use of proceeds” bonds and sustainability-linked bonds. For bonds such as green, social and sustainability bonds, ESMA said that prospectuses should include disclosure regarding the use of proceeds, along with information enabling investors to assess the ambition underlying project evaluation and selection. Information to be provided in prospectuses for sustainability-linked bonds includes details about selected key performance indicators (KPIs) and sustainability performance targets (SPTs), as well as information enabling assessment of the consistency of KPIs and SPTs with relevant science-based targets and the issuer’s sustainability strategy.

ESMA also noted that it has observed “that some issuers include sustainability-related disclosure in their advertisements that is not included in their prospectus,” and that this information should be included in prospectuses if material, adding that “the importance of the sustainability-related disclosure in the advertisement for investors is an indicator of its materiality.”

Click here to access ESMA’s statement.