The European Securities and Markets Authority (ESMA) has released new guidance to help market participants address greenwashing risks in sustainability claims related to funds and bonds, with a particular focus on positive impact and climate transition claims. 

The guidance builds on ESMA’s earlier thematic notes on ESG credentials, labels, ratings, certificates and sustainable investment strategies. Although it introduces no new regulatory obligations, it clarifies expectations for sustainability communications to be Accurate, Accessible, Substantiated and Up to Date. 

ESMA identified common issues in positive impact claims, including confusion between investor impact and investee impact, unclear explanations of how investments generate positive environmental or social outcomes, and insufficient supporting evidence. It encourages fund and bond providers to clearly define their intended impact, demonstrate intentionality and additionality, and measure results using relevant key performance indicators (KPIs). 

For climate transition claims, ESMA highlights the uncertainties associated with forward-looking targets and evolving factors such as technology and public policy. Market participants should clearly communicate their transition ambitions, objectives, targets, metrics, implementation strategies and progress, while explaining how their plans contribute to broader EU or global climate goals. 

The guidance also outlines good and poor practices. Providers should explain how intended impacts will be achieved and measured, use credible scientific scenarios and decarbonisation pathways, and avoid vague sustainability statements or unsupported alignment claims. ESMA further cautions against presenting portfolio emissions reductions as equivalent to real-economy decarbonisation. 

Overall, the guidance reinforces the importance of transparent, measurable and evidence-based sustainability claims to strengthen investor trust and reduce greenwashing risks. 

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