The European Securities and Markets Authority (ESMA) recently issued a statement on sustainability disclosures in prospectuses under the EU Prospectus Regulation. Although the statement is primarily directed at EU National Competent Authorities (NCAs), ESMA explicitly states that the content should be considered by issuers and advisors during the preparation of prospectuses containing sustainability-related disclosures.
The communication from ESMA conveys its expectation that prospectuses (and final terms) reflect clear, comprehensive, and meaningful sustainability disclosures. The guidance is crucial in ensuring that potential investors have access to sufficient and useful information on sustainability risks and prospects relative to the issuer’s operations.
While this guidance from ESMA is not legally binding, it provides merits careful consideration as it reflects the regulator’s current views on the matter. Additionally, it offers insights into ESMA’s likely approach in evaluating whether disclosure requirements have been duly met.
This development calls for some practical considerations in drafting prospectuses and final terms with sustainability-related disclosure. These include assessing the impact of a company’s business on the environment and incorporating relevant environmental, social, and governance factors into key performance indicators and risk factors.
The specific guidance offered by ESMA also underscores the urgency of staying abreast of evolving sustainability disclosure obligations. It shows a more rigorous interpretation and application of the disclosure requirements in the EU Prospectus Regulation relating to sustainability risks and opportunities.
For more detailed discussion and guidance, refer to the original statement and its analysis by Hogan Lovells here.