ESMA highlights its contribution to a more sustainable financial system

The European Securities and Markets Authority, the EU’s securities markets regulator, is committed to contributing to a more sustainable financial system, as part of the European Green Deal  and global efforts to deliver on the United Nations’ COP26 objectives on combatting climate change.

European financial markets are at a point of change: investor preferences are shifting towards financial products that incorporate environmental factors. Moreover, environmental factors are increasingly affecting the risks, returns and value of investments. Considering these challenges, ESMA has a key role in helping investors better understand the impact of environmental, social and governance (ESG) factors on their investments and how an investment contributes to a sustainable future. To support this work, ESMA published its Strategy on Sustainable Finance , in February 2020, setting out concrete steps to integrate ESG factors across all areas of its activity.

ESMA actively contributes to the development of the sustainable finance rulebook and to its consistent application and supervision taking the necessary measures to promote investor protection across the EU. ESMA also engages in risk assessment and market monitoring activities focusing on potential financial stability risks stemming from ESG factors.

ESMA believes that international cooperation is key to ensuring that consistent measures are taken to protect investors and secure financial stability as the demand for sustainability-related financial products increases. In this regard, ESMA supports, and participates in the work of IOSCO and its Sustainable Finance Task Force, as well as the relevant activities of the Network for Greening the Financial System and the Financial Stability Board.

Building an internationally comparable set of rules and principles that are applicable across the entire sustainable investment value chain is essential to address the global challenges facing financial markets due to climate change.