ESMA Publishes Explanatory Notes On The Definition Of

The European Securities and Markets Authority ("ESMA") has today published three useful explanatory notes covering key topics of the European sustainable finance framework, namely: a) the definition of "sustainable investments"; b) the application of do no significant harm ("DNSH") principle; and c) the use of estimates.

The explanatory notes set out factual information regarding these concepts, with the aim of allowing stakeholders to navigate and better understand the EU's sustainable finance legislative framework. These documents are described by ESMA as purely descriptive and not intended to replace relevant legal texts nor to provide guidance on the application of relevant provisions.

Nevertheless, they are a useful consolidated resource on these important and, at times, difficult topics and will be of particular value to those currently preparing for and applying these concepts in relation to the Taxonomy Regulation, Sustainable Finance Disclosure Regulation, Corporate Sustainability Reporting Directive and the Benchmark Regulation. For further information about these regulations, please read our earlier updates here, here, here and here.

The explanatory notes are available here:

Concepts of sustainable investments and environmentally sustainable activities in the EU Sustainable Finance framework: ESMA30-379-2279 Concepts of sustainable investments and environmentally sustainable activities in the EU Sustainable Finance framework (europa.eu)

'Do No Significant Harm' definitions and criteria across the EU Sustainable Finance framework: ESMA30-379-2281 'Do No Significant Harm' definitions and criteria across the EU Sustainable Finance framework (europa.eu)

Concept of estimates across the EU Sustainable Finance framework: ESMA30-1668416927-2548 Concept of estimates across the EU Sustainable Finance framework (europa.eu)

Originally Published by 22 November 2023

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