In a major move to simplify ESG reporting in European markets, the European Securities and Markets Authority (ESMA) has recommended regulatory changes aimed at easing the compliance burden for benchmark administrators. The latest proposals follow ESMA’s first coordinated supervisory review with National Competent Authorities (NCAs) under the Benchmarks Regulation (BMR), marking a turning point in Europe’s approach to ESG disclosures.

According to the findings of the 2024 Common Supervisory Action (CSA), ESMA suggests two major changes: a call to the European Commission to revise Level 2 measures of the BMR to reduce red tape, and a push for benchmark administrators to enhance clarity, consistency, and comparability of ESG-related information.

ESMA’s statement notes, “The objective is to alleviate the regulatory burden on benchmark administrators and to enhance transparency and comparability of ESG information for the benefit of users of benchmarks.”

The review revealed inconsistencies and complexities in current ESG disclosures that could lead to confusion among investors and end users. ESMA believes that more consistent rules will allow for better decision-making in the investment community, while reducing friction in compliance procedures. With sustainable finance increasingly embedded in capital markets, the need for coherent and harmonized ESG frameworks has never been more urgent.

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The regulator also highlighted the importance of aligning ESG disclosure rules across various sustainable finance legislations. “ESMA considers the wider regulatory context on sustainable finance and the need to ensure consistency and compatibility of the ESG disclosure requirements across the various sustainable finance legislations,” the report stated.

Looking ahead, ESMA plans to work closely with national authorities and the European Commission to drive supervisory convergence across the EU. By applying supervisory tools and promoting a unified culture, ESMA aims to strengthen oversight and ensure that ESG benchmarks are both credible and accessible.

As demand for sustainable investment products grows, ESMA’s recommendations reflect a broader shift toward refining ESG infrastructure, making it more streamlined, trustworthy, and investment-ready.

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