European regulators to intensify their focus on implementing the sustainable finance framework in 2025

The European Supervisory Authorities have each published their work programmes for 2025 setting out their strategic priorities for the coming year. Sustainable finance remains one of the top priorities for all three regulators.

European Securities and Markets Authority (ESMA) 

According to its 2025 Annual Work Programme, ESMA will intensify its focus on implementing the sustainable finance legal and supervisory framework, combating greenwashing, and promoting transparency in sustainable investments. 

Specific outputs in relation to sustainable finance for 2025 include:

• building on work conducted on greenwashing risks in 2022-2024 to further clarify supervisory expectations. 
   
• collaborating with national supervisory authorities to support the development of supervisory tools and methodologies to detect and address potential greenwashing practices, including using natural language processing (NLP).
   
• assessing vulnerabilities of financial market participants and products within ESMA’s remit to adverse climate-related financial shocks.
   
• developing tools that enable supervisors to best address greenwashing risks and enhance the effectiveness and quality of ESG disclosures.
   
• producing guidance on sustainability claims to Financial Market Participants (FMPs).
   
• building on various Common Supervisory Actions (CSAs) that have been conducted with a sustainability angle and monitor the implementation of guidelines such as those on fund names. This includes a CSA on Benchmark Regulation ESG disclosures.
   
• developing technical standards on several aspects under the Green Bond Regulation relating to the registration and supervisory regime for external reviewers.
   
• developing technical standards under the ESG Ratings Regulation, the publication of which is expected at the end of 2024. These include RTS on registration application, methodological disclosures to the public and methodological disclosures to users of ESG ratings and to rated entities.
   
• publishing the annual report (along with the other European Supervisory Authorities) on the extent of voluntary disclosures of principal adverse impact disclosures under the SFDR.
   
• developing machine readable templates for SFDR disclosures (subject to the European Commission adoption of revised standards).
   
• potentially providing further guidance and Q&As for sustainability disclosures under the SFDR.
   
• conducting a joint ESAs climate stress test exercise with the European Systemic Risk Board.

European Banking Authority (EBA)

For the EBA, work on prudential treatment of exposures in relation to ESG will remain one of its focal points. According to its Work Programme for 2025, the EBA will:

• finalise its Guidelines on ESG risks management in Q1.
   
• incorporate ESG and greenwashing considerations into existing EBA legal instruments on retail conduct and consumer protection, such as the EBA Guidelines on Product Oversight and Governance, in Q3.
   
• publish the second batch of ESG risk assessment and monitoring tools in Q4.
   
• report on effective riskiness, additional modifications to the framework and effects on financial stability and banking in Q4.

European Insurance and Occupational Pensions Authority (EIOPA)

For EIOPA, sustainable finance remains one of its priorities being present in all areas of its work, including embedding ESG in the prudential and conduct frameworks. According to its Work Programme in 2025, EIOPA will:

• continue its work to deliver on the requirements arising from the review of the Solvency II Directive.
   
• position itself as a Centre of Excellence for catastrophe modelling and data. 
   
• conduct initiatives on conduct risks, such as greenwashing following the successive reviews and implementation of sustainability-related product disclosures. Corporate sustainability reporting will also be emphasised. 
   
• continue updating its EU-wide dashboard on natural catastrophe insurance protection gaps.