ESMA gives firms practical tests for impact and transition claims

On October 12, ESMA published two thematic notes on impact and climate-transition claims, according to Simpson Thacher’s October 15 regulatory update. The impact guidance calls for explanations of intentionality, additionality and measurability and a distinction between investee and investor impact; the transition guidance emphasizes baselines, time horizons, milestones, metrics, implementation and progress. The notes create no new requirements and do not prejudge the SFDR review, but they translate the existing clear, fair and not misleading standard into reviewable claim elements. Asset managers and counsel should use those elements as a marketing-approval checklist and retain evidence showing why portfolio decarbonization is not being presented as equivalent to real-economy emissions reduction.