ESG
CSSF publishes supervisory priorities for sustainable finance for 2026
The CSSF recently issued a press release outlining its updated supervisory priorities in the area of sustainable finance, focusing in particular on the areas set out below.
Supervisory priorities for credit institutions and investment firms
1. Strong focus on transparency & disclosures (SFDR / Pillar 3 ITS)
The CSSF will continue to closely supervise SFDR disclosure obligations for credit institutions and investment firms falling within the scope of Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR) through the long-form report, based on Circulars 22/821 and 24/853, as amended. Answers in the self‑assessment section will directly influence prudential supervision and may trigger enforcement measures. The CSSF will continue to carry out on-site inspections on depositary entities, integrating ESG-related investment restrictions monitoring, as laid down in the ESMA Supervisory Briefing on Sustainability risks and disclosures in the area of investment management.
2. Intensified oversight of ESG risk management & governance
Climate and nature‑related risks remain one of the supervisory priorities for the banking sector. The CSSF will verify alignment of the banking sector with the CSSF’s expectations as set out in Circular 26/905. The CSSF will continue to carry out on-site inspections on governance and credit risks, incorporating ESG aspects, and dedicated ESG risk-focused inspections may be launched.
3. Continued supervision of MiFID II sustainability rules
The CSSF will maintain its risk‑based, proportionate approach to MiFID II sustainability requirements, adjusting intensity according to entity risk profiles and regulatory uncertainties.
Supervisory priorities for the asset management industry
The CSSF will continue to monitor Investment Fund Managers’ (IFMs) compliance with the sustainability-related provisions set out in the SFDR, the SFDR RTS and the Taxonomy Regulation, with a view to increasing transparency for investors and avoiding the practice of greenwashing, focusing on:
1. integrating sustainability risks into governance, HR, investment processes, remuneration, risk management and conflict‑of‑interest frameworks;
2. ensuring pre‑contractual and periodic disclosures meet SFDR, RTS and taxonomy transparency requirements;
3. ensuring consistency of sustainability disclosures across fund documents and marketing materials;
4. ensuring IFM website disclosures meet SFDR publication and maintenance obligations;
5. reviewing portfolios to ensure holdings match the fund’s name, strategy and disclosed characteristics.
The CSSF will also continue to use SFDR data collections to refine supervision, while IFMs must keep all submitted information up to date and can expect continued clarifications from the CSSF.
Supervisory priorities for issuers
The CSSF will continue to guide issuers that voluntarily apply European Sustainability Reporting Standards (ESRS), using fact‑finding exercises and bilateral exchanges to highlight key reporting expectations, while ESMA and national enforcers maintain common enforcement priorities for annual reports.
In the context of approving securities prospectuses, the CSSF will keep working with ESMA on defining minimum ESG disclosure requirements for prospectuses at EU level and related Q&As and guidelines at European level.
This update is a clear reminder that, notwithstanding the European Commission’s broader reflections on the future development of the SFDR framework, the CSSF intends to continue to actively enforce compliance with the existing sustainable finance rules.
In practice, IFMs should expect continued supervisory scrutiny of SFDR disclosures and internal consistency across documentation, with particular focus on greenwashing risks and alignment between portfolio holdings and disclosed ESG characteristics.
EU adopts Directive 2026/470 amending CSRD and CSDDD
Directive EU 2026/470 introduces targeted amendments to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDD), adjusting certain reporting and due-diligence requirements at EU level.
For further details on this topic, please refer to our separate AKD newsletter:
AKD - Changes to the CSRD: Omnibus Directive enters into force on 18 March 2026