On the 11th of July 2023, the European Securities and Markets Authority (ESMA) published a statement[1] underlining its expectations with respect to the nature and extent of sustainability disclosures to be included in both equity and debt prospectuses prepared in accordance with the Prospectus Regulation.[2]

In setting out the rationale behind this statement, ESMA notes that notwithstanding the European Commission’s plans (which are currently in the pipeline) to tackle sustainability-related disclosures as part of the proposed Listing Act[3] and EU Green Bond Standard[4] (EU GBS), any prospectuses published in the interim period should include sustainability-related disclosures to the extent that these are considered ‘material’ to an investor in accordance with article 6 of the Prospectus Regulation. When determining what exactly constitutes ‘material’ information, ESMA states that the specific circumstances of the issuer, as well as the nature of the securities in question, will need to be considered. For instance, any statements concerning the sustainability profile of the issuer and/or the securities being issued will need to be duly justified within the prospectus. Additionally, ESMA goes on to clarify that any sustainability-related disclosures published by the issuer in accordance with its obligations under the Non-Financial Reporting Directive[5] and/or the Corporate Sustainability Reporting Directive[6] are to be included in equity prospectuses.

As for prospectuses relating to ‘use of proceeds’ bonds (such as green bonds) or sustainability-linked bonds, ESMA also provides some clarity regarding expected prospectus disclosures, including (in relation to ‘use of proceeds’ bonds) information on the use and management of the bond proceeds and (in relation to sustainability-linked bonds) information regarding the key performance indicators and sustainability performance targets selected by the issuer in question.



[2] Regulation (EU) 2017/1129 of the European Parliament and of the Council

[3] Proposal for a regulation of the European Parliament and Council amending Regulations (EU) 2017/1129, (EU) No 596/2014 and (EU) No 600/2014 to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises

[4] Proposal for a Regulation of the European Parliament and of the Council on European green bonds, COM/2021/391 final

[5] Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups

[6] Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 as regards corporate sustainability reporting

This article was written by Dr Luke Hili (Associate, Capital Markets, insurance & reinsurance).

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