ESMA will monitor the implementation of its guidelines, including guidance on the labelling of funds using ESG criteria, sustainability conditions or the promotion of sustainability information. The organisation will lead supervisory discussions and provide specialised training through the Sustainable Finance Knowledge Centre.

ESMA has recently reviewed its key performance indicators and created new result indicators that measure the extent to which its priorities are being met. In the area of greenwashing risk in the fund sector, the new relevant result indicator concerns the percentage of European funds with sustainability features where there is a risk of misleading investors. This risk is assessed based on the consistency and clarity of the fund documentation and its correspondence with the portfolio holdings data using natural language processing techniques.

What's next?

Tackling greenwashing remains a priority for ESMA, reflecting the increasing regulatory focus on sustainability. ESMA will continue to support the EU’s transition to a sustainable economy by working to prevent the risks associated with greenwashing. In terms of concrete steps, ESMA announced plans to produce a report on addressing the risk of greenwashing in the sustainable investment fund market by Q2 2026. In addition, it will finalise the project “Tackling the risk of greenwashing in the sustainable investment fund market” as part of the European Commission’s technical support for 2024 and finalise it in 2026.

What should fund managers do?

The focus on reducing the risk of greenwashing and the provision of statements is nothing new, but it is a reminder that this is a key priority. Fund managers should carefully review their sustainability claims in fund materials to ensure that they are clear, fair and not misleading, reflect the true state of affairs and are consistent with any ESG disclosures (for example, under the SFDR). With the growing divergence in approaches to ESG between the US and Europe, these issues are even more important, and managing the different dynamics in the presentation of this information is therefore a key challenge for global managers. Spring

Link to the programming document for 2026-2028 here