ESMA publishes thematic notes on clear, fair and not misleading sustainability-related claims

On 1 July 2025, the European Securities and Markets Authority (ESMA) published thematic notes providing guidance to market participants on making sustainability-related claims that are clear, fair, and not misleading. The guidance, which forms part of a broader initiative to address greenwashing risks and support sustainable investments, sets out four core principles for sustainability claims and offers practical examples of good and poor practices across the sustainable investment value chain.

The guidance should be taken into account by banks, including in relation to issuance of green products (including structured products / notes). The good and bad practices set out in the papers should also be focused on by asset managers, in particular against the four principles set out below.

The ESMA notes are intended as educational tools, building on observed market practices and the European Supervisory Authorities’ (ESAs) common understanding of greenwashing, as articulated in recent progress reports.

The guidance applies to all non-regulatory communications (such as marketing materials and voluntary reporting) and is designed to complement, rather than replace, existing regulatory disclosure requirements.

Key principles for sustainability claims:

ESMA identifies four principles that market participants should follow to mitigate greenwashing risks:

1. Accuracy: Claims must fairly and accurately represent the sustainability profile of the entity or product, avoiding exaggeration, omission, vagueness, and cherry-picking. ESG terminology and imagery should be consistent with the actual sustainability profile.
2. Accessibility: Information should be easy to access and understand, with appropriate detail for the intended audience. Where space is limited, substantiation should be provided through layered disclosures or links to further information.
3. Substantiation: Claims must be supported by clear and credible reasoning, facts, and processes. Methodologies, assumptions, and limitations should be disclosed, and comparisons should be meaningful and transparent. This limb is open to interpretation. What is a sufficient methodology or process? How much disclosure is necessary? Much will be fact dependent, but in some cases there may be more needed on this.
4. Currency: Information must be kept up to date, with material changes disclosed in a timely manner. The date and scope of analyses should be clearly indicated.

The notes also provide detailed guidance on claims relating to ESG credentials, including industry initiatives, labels and awards, and peer comparisons. ESMA highlights the risk of misleading claims arising from overstating the significance of credentials, failing to update information, or cherry-picking favourable ratings. There are good and bad practices that ESMA sets out that should be mapped to an organisations context.

Industry initiatives: Market participants should clarify the significance of participation in voluntary ESG initiatives, including any commitments or reporting requirements. Claims should be updated if the entity leaves the initiative or if ratings change, and should not be used to imply product-level benefits without substantiation. This is potentially significant as an area, but dynamic updating of whether an organisation is or is not in an industry initiative is not always possible.

Labels and awards: The underlying criteria, governance, eligibility, and potential conflicts of interest associated with labels and awards should be disclosed. Regulatory disclosures (such as SFDR classifications) should not be misrepresented as third-party labels.

Peer comparisons: When making comparisons to peers, the basis for the comparison, the peer group, and the methodology should be clearly explained. Comparisons should only be made where relevant and meaningful, and sources and assumptions must be disclosed.

Examples of good and poor practices

The notes include illustrative examples to clarify expectations:

• Good practices: providing detailed, up-to-date explanations of credentials, transparent disclosure of methodologies and conflicts of interest, and appropriate use of layered information.
• Poor practices: making unsubstantiated or outdated claims, exaggerating the significance of credentials, omitting relevant information, and selectively referencing favourable ratings while ignoring less favourable or updated information.

ESMA’s thematic notes reinforce the responsibility of market participants to ensure that sustainability-related claims are accurate, accessible, substantiated, and current. By adhering to these principles, market participants can enhance transparency, support investor protection, and mitigate the risk of greenwashing in sustainable finance markets. The guidance is expected to inform both supervisory expectations and market practices as the regulatory framework for sustainable finance continues to evolve.

For further detail on previous reports on greenwashing, please see our 19 June 2023 update on ESA's 31 May 2023 greenwashing report and our Greenwatch briefing series.