ESMA has given investment firms and product providers more specific guidance for explaining what sustainability claims promise and how those promises can be assessed. Two notes published on 12 October address impact claims for funds and bonds, and transition claims across funds, bonds and benchmarks.[1]
The immediate relevance is to marketing, voluntary reports and oral communications outside prescribed regulatory disclosures. ESMA says the notes support existing duties to communicate clearly, fairly and without misleading investors; they introduce no new regulatory requirements. Distribution teams can use them when reviewing the language attached to investment products.[1]
For impact products, the central distinction is between an investee’s activity and the investor’s contribution. A company may produce an environmental benefit, while a fund’s claim to have caused or increased that benefit needs a separate explanation. ESMA highlights a theory of change: the stated connection between the investment strategy, the manager’s actions and the intended result.[2]
The note also separates outputs from outcomes. Allocating money to projects can show deployment; it is not, by itself, a measurement of what improved for people or the environment. Asset selection based on exclusions or conventional ESG risk measures should not be presented as an impact strategy without explaining the actual impact criteria.[2]
What a transition claim should explain
| Element | Evidence investors need |
|---|---|
| Ambition | Objective, scope, metric, reference year and starting value |
| Implementation | Actions and investment approach, with material assumptions and dependencies |
| Progress | Measurement against the objective, including deviations from the stated path |
A particularly relevant distinction for fund platforms is portfolio decarbonisation versus real-economy emissions reductions. Selling a higher-emitting holding can improve the portfolio’s measured profile. A claim that the transaction changed emissions outside the portfolio needs a further account of the mechanism. ESMA explicitly warns against treating those outcomes as equivalent.[3]
This gives distributors a useful way to question promotional language: identify the promised result, then ask whether the evidence concerns that same result. A transition strategy may target exposure to companies with credible plans; an impact strategy may seek an additional outcome through financing or engagement. The customer-facing description needs to preserve that difference.[2][3]
Sources & further reading
- ESMA promotes clarity in claims on impact and transition European Securities and Markets Authority · 12 Oct 2026 · Accessed 20 Oct 2026
- Thematic note on impact claims European Securities and Markets Authority · 12 Oct 2026 · Accessed 20 Oct 2026
- Thematic note on transition claims European Securities and Markets Authority · 12 Oct 2026 · Accessed 20 Oct 2026