Launch of the ESMA common supervisory action on sustainability risks and disclosures in the investment fund sector in Luxembourg


On 6 September 2023, the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) published a communication announcing that, on 29 August 2023, it contacted certain UCITS managers (UCITS Managers) and alternative investment fund managers (AIFMs, and together with UCITS Managers, the In-Scope IFMs) via email in the context of the first stage of the common supervisory action (CSA) launched by the European Securities and Markets Authority (ESMA) at the beginning of summer 2023.

As a reminder, the primary objective of this CSA is to assess the compliance of In-Scope IFMs with the relevant provisions outlined in the Sustainable Finance Disclosure Regulation, the Taxonomy Regulation, and the applicable implementing measures.

The CSA comprises two distinct stages:

  1. First Stage: During this initial phase, national competent authorities (NCAs) will request In-Scope IFMs to complete a questionnaire that delves deeper into the assessment of greenwashing risks.
  2. Second Stage: In the subsequent phase, NCAs will request In-Scope IFMs to complete a questionnaire dedicated to examining the integration of sustainability risks and factors within the organisational structure of In-Scope IFMs. Additionally, this phase will involve an evaluation of transparency disclosures at both IFM and product level.

Technical details and deadlines pertaining to these stages will be communicated directly to the relevant entities on a bilateral basis. IFMs which have not yet been contacted by the CSSF are not concerned by this CSA.

Enhancing convergence in the supervision of risks arising from incorrect and misleading disclosures is a central part of efforts to promote transparency and is recognised as one of the European Union’s strategic supervisory priorities for NCAs. The CSA aims to achieve this by improving the clarity of sustainability disclosures made by IFMs throughout the sustainable finance value chain. Additionally, the preliminary findings regarding the identification of greenwashing risks at both entity and product level will contribute to ESMA's final report on greenwashing.

As a next step, NCAs will keep carrying out their supervisory activities and share knowledge and experiences with ESMA until Q3 2024 to further promote convergence in the supervision of sustainability-related disclosures and sustainability risk integration in IFMs.