ESMA thematic notes show how to make clear impact and climate transition claims

On 12 October 2026 ESMA published two more thematic notes on sustainability-related claims: the third note, on impact claims (ESMA36-429234738-3593), and the fourth, on climate transition claims (ESMA36-460898240-641). They follow earlier notes on ESG credentials and ESG strategies, and ESMA says the notes should be read together as one thematic study.

The notes are educational and build on practices ESMA has observed in the market. They apply to non-regulatory communications, such as marketing material and voluntary reporting, rather than to documents required by disclosure rules such as prospectuses, KIDs, management reports and benchmark statements. Short material for retail investors may use layering, with more detail available through links or references.

Both notes repeat ESMA's four principles: claims should be accurate, accessible, substantiated and up to date. Claims can mislead through cherry-picking, exaggeration, omission, vagueness, inconsistency, missing comparisons or thresholds, or misleading images and sounds, whether or not the firm intends it. For the general rule on client information, see our study note on client information.

The impact note covers funds, use-of-proceeds bonds and sustainability-linked bonds, and any statement that refers, openly or by implication, to impact, positive change or similar terms. Firms should explain whether and how they address three dimensions: intentionality (an explicit aim, a theory of change and targets), additionality (impact that would not otherwise happen) and measurability (tracking and publishing results).

ESMA separates investee impact, the outcome a company or project produces, from investor impact, the result of the investor's own actions such as new capital, flexible financing or targeted engagement. If a fund only targets investee impact, it should tell investors that their money adds no extra impact beyond what the investee companies create. Firms should also say whether their KPIs measure outputs, outcomes or impact, because output metrics alone do not show a real-world benefit.

Among the don'ts: relying on exclusions or ESG risk metrics instead of impact criteria, calling a product impact solely because of its asset class or sector, using non-binding wording such as alignment with the UN SDGs, implying that holding listed shares generates impact on its own, and using disclaimers that distance the manager or issuer from impact data without explaining how its reliability is assessed. Bond issuers should not keep citing positive pre-issuance second-party opinions while failing to deliver the reporting they promised.

Transition claims are becoming more common. ESMA counts 413 UCITS and AIFs with transition-related words such as 'net-zero' or 'progress' in their names in the first quarter of 2026, with about EUR 230bn in assets. Of these, 334 were UCITS, compared with 220 a year earlier.

Because these claims look forward and depend on assumptions and outside factors, ESMA asks firms to communicate clearly on three things: the ambition (where relevant its objectives, targets and metrics, with base year and base value, and how it relates to EU or global climate objectives), the implementation strategy (for example the fund's investment strategy or the activities a bond finances, with material assumptions and dependencies) and the progress achieved, including how it is monitored. Governance and remuneration also support credibility.

ESMA found that reporting on progress lags behind the forward-looking ambitions. Its don'ts include presenting portfolio decarbonisation as if it equalled real-economy emissions cuts, relying on ESG ratings or proprietary scores without explaining the method, citing external validation or assurance without its scope and limits, reporting only good news, and changing metrics without explanation. Firms should say in good time when progress falls short or a target is no longer achievable.

Nothing new applies. ESMA says the notes do not prescribe a particular approach or level of ambition, including in the context of the ongoing review of the Sustainable Finance Disclosure Regulation (SFDR). They help firms understand what the existing duty of clear, fair and not misleading communication means for these claims.

Fund managers and investment firms that market or distribute funds with impact or transition claims can use the do's and don'ts, and the 26 worked examples, as a checklist for brochures, websites, factsheets and impact or progress reports. ESMA also notes that some of the poor practices it describes for bonds may not meet the disclosure requirements in Annex 23 of Delegated Regulation (EU) 2019/980 for non-equity securities marketed with ESG features.