ESG letters
iStock / Black Kira

As part of the ongoing fight against greenwashing, a compliance sweep by European regulators will — for the first time — examine ESG disclosures by the administrators of financial benchmarks.

The European Securities and Markets Authority (ESMA) announced the launch of a compliance review, along with the region’s various national regulators, that will target benchmark administrators (including both European and non-European firms) to assess their adherence to the disclosure requirements under the rules for benchmarks.

Among other things, the review will cover the disclosure of ESG factors in the methodologies used to calculate benchmarks, ESG disclosure in benchmarks’ statements, and specific disclosure requirements regarding climate benchmarks.

ESMA said the review, which is its first since it began directly supervising benchmark administrators, “will help ensure consistent and effective supervision” of their ESG disclosures, and aims to enhance the comparability of the information provided to investors and other benchmark users.

It also sees the initiative as part of its overall efforts to boost market transparency and combat greenwashing, “with a view to protecting investors and further supporting the development of a credible ESG market,” it said.

The review will begin next year and is expected to run into the first quarter of 2025, it said.