The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has issued a Public Statement on the sustainability disclosure expected to be included in prospectuses.
The statement sets out ESMA’s expectations on how the specific disclosure requirements of the Prospectus Regulation in relation to sustainability-related matters in equity and non-equity prospectuses should be satisfied considering the Environmental, Social and Governance (ESG) transition. This will help to:
ensure that national competent authorities (NCAs) take a coordinated approach to the scrutiny of sustainability-related disclosure in prospectuses;
provide issuers and their advisors with an understanding of the disclosure that NCAs will expect them to include in their prospectuses; and
support investors’ ability to make an informed investment decision considering the importance of disclosure relating to sustainability-related matters.
Expected ESG disclosure in prospectuses
The Statement draws attention to the sustainability-related disclosure necessary to satisfy the relevant provisions of the Prospectus Regulation (PR).
ESMA emphasises the importance of an issuer’s non-financial reporting under the Non-Financial Reporting Directive and the future sustainability reporting under the Corporate Sustainability Reporting Directive, especially because such disclosure may be material under the PR and included in an issuer’s prospectus.
In addition, regarding non-equity securities advertised as taking into account a specific ESG component or pursuing ESG objectives, the statement clarifies the disclosure required in relation to ‘use of proceeds’ bonds and ‘sustainability-linked’ bonds.
The Public Statement also notes that sustainability-related disclosure is sometimes included in advertisements but not in prospectuses themselves and highlights that this disclosure should be included in prospectuses if it is material under the PR.