The CSSF’s supervisory priorities in the area of sustainable finance

The objective of this document is to provide a general overview of the CSSF’s supervisory priorities in the area of sustainable finance.

Integrating sustainability considerations and effectively managing sustainability risks should not be seen only as stemming from regulatory requirements, but also as essential drivers of long-term financial strategies and resilience. While the regulatory framework in relation to sustainable finance is evolving, the CSSF’s supervisory priorities in the area of sustainable finance are designed to support a transparent, credible, and coherent transition of the financial sector towards long-term sustainability objectives.

Given this context, the CSSF plays an active role in representing Luxembourg within key European and international groups driving initiatives that shape directly or indirectly the sustainable finance framework, with a view to promoting coherence, consistency, and long-term improvements, as well as clarifying fundamental concepts underpinning its implementation. Notably, the CSSF is engaged in constructive dialogue with stakeholders to ensure that the sustainable finance framework remains effective, proportionate, and fit for purpose, while maintaining a risk-based approach to supervision.

This document should not be interpreted as an exhaustive account. It rather aims at drawing the attention of the financial sector to a number of prominent matters to be addressed in this area. If deemed necessary, our supervisory priorities may be adjusted depending on emerging risks and regulatory developments.

When shaping and calibrating its supervisory priorities, the CSSF will take due consideration of the ongoing EU regulatory developments concerning sustainability-related transparency and disclosure obligations, including the review of Regulation (EU) 2019/2088 and Implementing Regulation 2024/3172 (‘Pillar 3 disclosure ITS’).

1. Transparency and disclosures: The CSSF will continue to ensure the supervision of disclosure obligations for credit institutions and investment firms which fall in the scope of Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR) through the long form report, as revised pursuant to Circular CSSF 22/821 (as amended by Circulars CSSF 24/865, CSSF 23/845 and CSSF 25/897) and Circular CSSF 24/853 (as amended by Circulars CSSF 25/870 and 26/904), respectively. Answers to the self-assessment section of the long form report will be assessed as part of the prudential supervision and will enable the CSSF to take enforcement measures where appropriate. Additionally, 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. Risk management and governance: For credit institutions, prudent management of climate and nature-related risks remains one of the priorities for the banking sector, as per the SSM’s supervisory priorities for 2026-2028. The CSSF will continue to review and monitor risk integration in order to ensure proper alignment of the banking sector with the CSSF’s expectations set out in Circular CSSF 21/773 and with the EBA Guidelines on the management of ESG risks, implemented in Luxembourg through Circular CSSF 26/905. In addition, the CSSF will continue its on-site inspections on governance and credit risks, integrating ESG aspects, and may also conduct on-site inspections specifically focused on ESG risks.
3. MiFID rules related to sustainability: The CSSF will continue to ensure the supervision of MiFID rules related to sustainability. In this context, the CSSF will adopt a proportional approach in its supervisory practices, ensuring that both the scope and intensity of supervisory actions take into consideration not only the specific risks and circumstances of supervised entities but also the remaining uncertainties and potential evolution of the regulatory landscape.

The CSSF will continue to monitor Investment Fund Managers’ (IFMs) compliance with the sustainability-related provisions as set forth under the SFDR, the SFDR RTS and Regulation (EU) 2020/852 (the Taxonomy Regulation). In doing so, the CSSF will take due consideration of the principles and guidance laid down in the ESMA Supervisory Briefing on Sustainability risks and disclosures in the area of investment management as well as the ESMA Guidelines on funds’ names using ESG or sustainability-related terms. This approach should serve to increase transparency for investors as well as avoiding the practice of greenwashing.

The CSSF will focus on the following priority areas applying a risk-based approach, integrating on-site and off-site supervision:

1. The verification of the integration of sustainability risks in the organisational arrangements of IFMs, notably in terms of human resources and governance, investment decision or advice processes, remuneration and risk management processes and policies and management of conflicts of interest as required under SFDR.
2. The verification of the compliance of pre-contractual and periodic disclosures with the transparency requirements under the SFDR, SFDR RTS and Taxonomy Regulation.
3. The verification of the consistency of sustainability-related disclosures across the fund documentation and marketing material.
4. The verification of the compliance of IFMs’ website disclosures obligations relating to the publication and maintenance of SFDR-related information for the investment funds they manage.
5. Conducting portfolio analysis to ensure that portfolio holdings reflect the name, the investment objective, the strategy, and the characteristics displayed in the documentation provided to investors.

The CSSF will keep leveraging the data obtained through its dedicated SFDR IFM, pre-contractual and periodic data collection exercises to enhance its supervisory work. IFMs remain responsible for ensuring that submitted information is continuously updated. In line with the SFDR FAQ and the CSSF communiqués on SFDR, the CSSF will also continue to offer clarifications to the industry as needed.

While the changes to Directive (EU) 2022/2464 on corporate sustainability reporting (CSRD) are still being finalised at EU level and the CSRD is still awaiting transposition in Luxembourg, the CSSF will continue to guide issuers that have chosen to voluntarily publish their sustainability statements in line with the requirements of the European Sustainability Reporting Standards (ESRS), notably through the publication of the results of fact-finding exercises, as was done in August 2025, and through bilateral exchanges to draw issuers’ attention to key points to keep in mind when developing their sustainability reports.

In addition, as in previous years, ESMA, together with the European national accounting enforcers, including the CSSF, will continue to identify and implement European common enforcement priorities (the “ECEPs”) for annual reports to which particular attention will be paid when monitoring and assessing the application of the relevant reporting requirements.

In the context of approving securities prospectuses, in collaboration with ESMA, the CSSF will continue to participate in the development of the annex defining the minimum ESG-related information to be included in the prospectus and related questions and answers and guidelines at European level.