ESMA’s statement on the sustainability disclosures in prospectuses drawn up in compliance with the Prospectus Regulation

On 11 July 2023, ESMA published a public statement on sustainability-related disclosures within prospectuses drawn up in line with the Prospectus Regulation¹ (the “Statement”). The Statement relates to environmental, social and governance (“ESG”) disclosures that are necessary to satisfy the provisions of the Prospectus Regulation. 

ESMA confirms that the Statement does not bring additional requirements to the ones already covered by the Prospectus Regulation and is also without prejudice to what may be required by the future Listing Act².

According to the Statement, even if sustainability-related information is not specifically covered by the Commission Delegated Regulation 2019/980 (the “CDR”), clarifying inter alia the content of the prospectuses, issuers are expected to provide this information in their prospectuses. 

In line with the provisions of the Prospectus Regulation, sustainability-related information should be provided to the extent that it is ‘material’. The materiality of the information strongly depends on the circumstances of the issuer and type of securities covered by the prospectuses. 

The Statement provides (i) general guidelines and (ii) recommendations for equity and (iii) non-equity securities. 

i. General guidelines

In relation to the sustainability-related disclosures in the prospectuses, the Statement provides recommendations to the issuers: 

• The basis for any statements concerning the issuer’s sustainability profile or that of the securities they issue, should be provided. For example, referring to (i) any label or standard the issuer or its securities are adhering to, (ii) the underlying data or (iii) any research and analysis by third parties. 
  In addition, this information should be as objective as possible, with a balanced view with both positive and negative aspects. 
• Issuers may refer to the possibility for its sustainability expectations to differ from those of an investor, or that the definition of sustainability may evolve over time, due to scientific progress, legislation, or investors preferences. 
  However, sustainability-related disclosures should not be used to excuse the non-performance of factors which the issuer exercises control on.
• The sustainability-related disclosures should be prepared in line with the requirement of comprehensibility of information under Article 37(1) of the CDR. Therefore, prospectuses should clearly define any technical sustainability-related terminology, components of mathematical formulars and, where applicable, clearly describe the product structure. 

Regarding sustainability-related information included in advertisements, ESMA confirms that such information should also be disclosed in the prospectuses, to the extent material.

ii. Equity prospectuses

The Statement provides clarity on the consistency between the sustainability-related disclosure in the equity prospectus and non-financial reporting requirements which apply to the issuer. 

The information published in the non-financial reporting, in accordance with Article 8 of the NFDR³ and the future sustainability reporting under the CSRD⁴ , should be inserted in the prospectus as well, to the extent that this information is material in the context of the relevant equity issuance.

iii. Non-equity prospectuses

The Statement covers the non-equity securities with a specific ESG component or objective i.e.  “use of proceeds bonds” (such as green bonds, blue bonds, etc.) and “sustainability-linked bonds”. 

• For “use of proceeds bonds”, ESMA expects disclosures about the use and management of the proceeds, together with the relevant information for the investors to be able to assess the sustainability ambition in the process for project evaluation and selection.
• For “sustainability-linked bonds”, ESMA expects information about the key performance indicators, the sustainability performance target(s) and information enabling the investors to assess consistency between the two, with any relevant sector specific based targets and the issuer’s sustainability strategy. 

ESMA further recommends the issuer to indicate whether it is intended to provide the investors with post-issuance information. 

Finally, the Statement also includes a table setting out the expected disclosures for both types of non-equity securities. 

If you have any questions on this topic, please feel free to contact our capital markets and ESG experts Aurélien Hollard, Julie Pelcé, José Ocaña or Julien Robert for further information. 

¹ _{Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market} 

² _{The Listing Act: facilitating access to capital for SMEs}

³ _{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}

⁴ _{Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting}