ESMA sets out its long-term vision on the functioning of the Sustainable Finance Framework

Main recommendations for the European Commission's consideration:

• The EU Taxonomy should become the sole, common reference point for the assessment of sustainability and should be embedded in all Sustainable Finance legislation;
• The EU Taxonomy should be completed for all activities that can substantially contribute to environmental sustainability and a social taxonomy developed;
• A definition of transition investments should be incorporated into the Framework to provide legal clarity and support the creation of transition-related products;
• All financial products should disclose some minimum basic sustainability information, covering environmental and social characteristics;
• A product categorisation system should be introduced catering to sustainability and transition, based on a set of clear eligibility criteria and binding transparency obligations;
• ESG data products should be brought into the regulatory perimeter, the consistency of ESG metrics continue to be improved, reliability of estimates ensured; and
• Consumer and industry testing should be carried out before implementing policy solutions to ensure their feasibility and appropriateness for retail investors.