CySEC Circular C594: ESMA launches a Common Supervisory Action (‘CSA’) with national regulators on the sustainability-related disclosures and the integration of sustainability risks

Relevant to: Investment Fund Managers1

Circular C594 (“the Circular”) dated 23/08/2023 informs Investment Fund Managers on ESMA’s Common Supervisory Action with national regulators on the sustainability risks.

Through Circular C594, CySEC wishes to inform Investment Fund Managers that the European Securities and Markets Authority (ESMA) has launched the 2023 and 2024 Investment Fund Sector CSA with National Competent Authorities (NCAs), on the sustainability-related disclosures and the integration of sustainability risks.

The key takeaways from CySEC’s C594 circular can be found below:

The aim of the CSA 2023 is:
- to assess the compliance of supervised asset managers with the relevant provisions in the Sustainable Finance Disclosure Regulation (SFDR), the Taxonomy Regulation and relevant implementing measures, including the relevant provisions in the UCITS and AIFMD implementing acts on the integration of sustainability risks;
- to assess whether market participants adhere to applicable rules and standards in practice;
- to gather further information on greenwashing risks in the investment management sector; and
- to identify further relevant supervisory and regulatory intervention to address the issue.

CySEC is planning to engage in relevant supervisory actions on samples of Investment Fund Managers. Such actions will allow CySEC to assess compliance regarding the integration of sustainability risks and disclosures.
For the purposes of the CSA 2023, the following regulatory framework will be considered (‘the Regulatory Framework’):
- Commission Delegated Regulation 2021/1255 EU;
- Commission Delegated Directive 2021/1270/EU;
- SFDR Regulation (EU) 2019/2088;
- Commission Delegated Regulation (EU) 2022/1288;
- Taxonomy Regulation (EU) 2020/852; and
- ESMA Supervisory Briefing on Sustainability risks and disclosures in the area of investment management (ESMA 34-45-1427) published on 31 May 2022.

CySEC further informs that it expects Investment Fund Managers, to adhere to the content of this Circular C594 and get well attained with the content of the Regulatory Framework in order to ensure their compliance with the applicable legal obligations regarding the integration of sustainability risks and disclosures.

Should you need more information or assistance with implementation of the CSA, you can email us at info@mnkriskconsulting.com or call us at 25-508201.

[1]Cyprus UCITS Management Companies and Self-Managed Cyprus UCITS (‘CUCITS MCs’) and Cyprus Alternative Investment Fund Managers and Self-Managed Cyprus AIFs (‘CAIFMs’).