The shift of investor preferences towards financial products which incorporate environmental, social and governance (ESG) factors and the increasing impact of such factors on the risks, returns and value of investments have implications for ESMA’s mission to enhance investor protection and promote stable and orderly markets.
As part of the broader review of the European Supervisory Authorities, the review of ESMA’s founding regulation strengthened ESMA’s role in relation to sustainable finance by requiring the Authority to take into account sustainable business models and the integration of ESG factors in its work.
To this end, in February 2020 ESMA adopted its first Strategy on Sustainable Finance. The Strategy presents ESMA’s approach to taking account of sustainable business models and integrating ESG related factors across its four main activity areas of single rulebook, supervisory convergence, direct supervision and risk assessment.
ESMA also contributed to the European Commission’s Consultation on the Renewed Sustainable Finance Strategy setting out its views in multiple areas of sustainable finance.