knowledge 4 November 2025 |

CBI Feedback Report on ESMA CSA on Sustainability Risks and Disclosures in the Investment Funds Sector

The CBI has noted that its findings are broadly in line with regulatory expectations, as firms demonstrated an appetite to comply with the requirements and positively engaged with the CBI throughout the review period.

However, the CBI has acknowledged that the issue of data availability in relation to sustainability disclosures was a common theme amongst firms. The CBI noted that whilst all firms have introduced processes and controls to support sustainability risk monitoring, some firms need to develop the maturity of these processes and controls to make them more robust and effective.

In terms of areas where the CBI would like to see improvement amongst firms, the CBI highlighted number of issues, including:

(i) inconsistent sustainability risk integration and monitoring;

(ii) the quality of underlying data used by individual firms to support effective sustainability risk integration and monitoring;

(iii) the reactive/proactive nature in which firms review controls to meet Sustainable Finance Disclosure Regulation (“SFDR”) regulation and guidance; and

(iv) firms’ appetite to continue to challenge the information contained in product and entity level disclosures to ensure these are clear and transparent for investors.

Sustainability Risk Integration and Monitoring

The CBI has indicated that it expects all firms to have a documented, robust and effective control framework in place that ensures their funds under management comply with the requirements of SFDR. This framework should include effective ongoing due diligence of funds, data and delegates combined with consistent independent monitoring carried out across all firms. Firms are expected to continue to monitor their level of resourcing, skills, knowledge and expertise on an ongoing basis relevant to the nature, scale and complexity of their funds.

SFDR Disclosures

The CBI has confirmed that firms should have robust frameworks in place to ensure that the disclosures made to investors in accordance with SFDR are clear and do not mislead investors. There should be clear and detailed disclosure regarding the binding elements used to attain the environmental or social characteristics promoted by the fund or the sustainable investment objective. If exclusions are applied as a binding element of the strategy, there should be clarity in respect of the applicable thresholds. If a fund tracks an index, the ESG criteria applied by the index should be detailed in the binding elements. The language contained in pre-contractual website and periodic disclosures should be regularly reviewed to ensure that these are aligned and meet the requirements of SFDR.

SFDR Regulations and Guidance

The CBI acknowledged the limitations of SFDR and that there are varied interpretations of some of the key components of the SFDR framework, leading to inconsistencies in sustainability processes being applied by the firms, which in turn contributes to the risk of non-compliance and greenwashing. The CBI also noted the inconsistencies evident in the varied interpretations and applications of data and data methodologies that firms are using when substantiating the ESG components of their funds. The CBI acknowledged the proposed revision of SFDR but maintained that in the meantime, firms should strive to be as clear and transparent as possible in applying SFDR.

Data Limitations

ESMA’s CSA has demonstrated that as data becomes more readily available and consistent, firms are more capable of enhancing their controls. The CBI indicated its expectation that firms should identify and consider data constraints at an early stage and should perform appropriate due diligence on the data and data providers on an ongoing basis to ensure the data used to substantiate the requirements of SFDR is accurate and up to date. The CBI clarified that it expects that firms are in a position to document and verify the underlying data used to substantiate SFDR compliance, in instances where firms are using attestations to conduct fund monitoring and oversight.

Conclusion

While the CBI has indicated that firms have made progress in establishing processes to ensure compliance, the CBI has emphasised that there are still several areas that require improvement.

The Central Bank expects that firms review and consider the contents of this report in conjunction with the ESMA Final Report on Sustainability including the good, below average and non-compliant practices identified within that report.

This report should be discussed with the Board of each in-scope firm and relevant personnel within each firm to ensure that the observations and expectations outlined by the CBI are considered.