ESMA 2026-2028: Tackling Greenwashing Remains Key Priority

With 2025 only just upon us, the European Securities and Markets Authority (ESMA) is already looking ahead to 2026 and beyond. In the current climate of regulatory change and development, the recent publication of ESMA’s 2026-2028 Programming Document provides some insightful indication as to the direction of sustainability-related regulation in the coming years.

With the publication of this document, ESMA confirms that tackling the risk of greenwashing remains one of its key objectives, and states that it seeks to maintain investors’ confidence in ESG investments by promoting high quality sustainability disclosures.

What does ESMA plan to do?

• ESMA will monitor the implementation of their guidelines such as the Guidelines on Fund Names Using ESG or Sustainability-Related Terms or the Guidelines on Enforcement of Sustainability Information. 
• ESMA will conduct supervisory case discussions and specialised trainings available via the Sustainable Finance Knowledge Hub.
• ESMA has also recently reviewed its Key Performance Indicators and has developed a set of key outcome indicators which measure the extent to which ESMA’s priorities are being achieved. On the topic of greenwashing risks in the funds industry, the new corresponding key outcome indicator is “% of EU funds with sustainability-related features which appear at risk of misleading investors. The risk is assessed, based on consistency and clarity of funds documentation and its alignment with portfolio holdings data, using natural language processing techniques”.

What is next?

As tackling greenwashing remains a priority for ESMA, the regulatory focus on sustainability appears to be increasing. ESMA will continue to support the EU’s transition to a sustainable economy by striving to prevent the risk of greenwashing. In terms of specific updates to come, ESMA has announced their plan to produce a report on tackling greenwashing risk in the sustainable investment fund market in Q2 of 2026. ESMA will also finalise the project on “Tackling greenwashing risk in the sustainable investment fund market” as part of the European Commission’s 2024 Technical Support Instrument in 2026.

What should fund managers be doing?

The focus on mitigating greenwashing risk and the statements made in the document are not new but are an important reminder of the fact that this is a key priority area. Managers should ensure that they carefully review sustainability statements in their fund materials to ensure they are clear, fair and not misleading, reflect what happens in practice and are consistent with any ESG disclosures (for example under SFDR). With the increasing divergence in ESG approaches between the US and Europe, these issues are even more important and managing the different dynamics in how this information is presented is a key challenge for global managers. 

Click here to access the 2026-2028 Programming Document.

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