25/04/23

CSSF supervisory priorities in sustainable finance

On 6 April 2023, the Commission de surveillance du secteur financier (the « CSSF ») published its supervisory priorities in sustainable finance, which are relevant for credit institutions, investment firms, investment fund managers, undertakings for collective investment and undertakings for collective investment in transferable securities.

As sustainability (including sustainability risks) is a long-term financial strategy, the CSSF aims at (i) establishing a cohesive implementation of the sustainable finance across the financial sector and (ii) integrating environmental, social and governance (“ESG”) into its supervisory practice with a gradual approach.

The CSSF reminds that (i) climate-related and environmental risks integration and mitigation shall be one of the priorities for the banking sector and (ii) the primary responsibility of ensuring compliance with applicable requirements, including ESG lies with the supervised entities and their board members.


Credit institutions and investments firms that provide investment advice and portfolio management services (the “Investment Firms”) are concerned with three main priorities:

  • Transparency and disclosures: the CSSF will supervise the credit institutions’ disclosure requirements as set out under (i) Regulation 2019/2088 on sustainability‐related disclosures in the financial services sector (“SFDR”), (ii) implementing technical standards on prudential disclosure on ESG risks and (iii) the long form report set out by Circular CSSF 22/821. For Investment Firms, the CSSF will establish a self-assessment questionnaire regarding their disclosure obligations under SFDR.
  • Risk management and governance: concerning credit institutions, the CSSF intends to (i) evaluate some less significant institutions and third-country branches on climate related and environmental risks in relation to its Circular 21/773 on the management of climate-related and environmental risks, (ii) carry out on-site inspections which concern such risks, alone or together with other aspects such as governance, business models and credit risks, (iii) carry out a sample-based review of the remunerations policies and practices to verify the integration of sustainability risks in governance and business models, at the end of the year. Regarding Investment Firms, the CSSF will implement a gradual approach to its supervision of ESG risks, prioritising the recognition of ESG risks in their strategies and governance arrangements while updating the Circular CSSF 20/758 on administration, internal governance and risk management.
  • MiFID rules related to sustainability: the CSSF expects credit institutions and Investment Firms to anticipate (i) the entry into application of the ESMA guidelines on MiFID II suitability requirements (Refer to our eAlert in this respect) and (ii) the common supervision action on marketing communications and advertising under MiFID II. Via notably dedicated on-site inspections, the CSSF also plans to verify the implementation of (i) new sustainability-related requirements in product governance, suitability assessments, conflicts of interest, information to clients and internal control functions by credit institutions and (ii) some aspects of the sustainability disclosures obligations by investment firms.


Furthermore, the CSSF sets forth its priorities for the asset management industry and issuers.

In line with the supervisory briefing published on 31 May 2022 by the European Supervisory Authorities, the CSSF confirms its role in monitoring the compliance with SFDR and the Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (the “Taxonomy Regulation”) by investment fund managers (the “IFMs”).

In that context, the CSSF will verify (i) the compliance with the pre-contractual and periodic sustainability-related disclosures requirements, (ii) the consistency with the website disclosures and (iii) the consistency of information in fund documentation and marketing material.

It is important to note the CSSF will verify that the IFMs are correctly reporting on the integration of sustainability risks in their activities and, for that purpose, will make sure that the sustainability risks considerations are integrated into the organisational arrangements of the IFMs.

In addition, the CSSF further reminds that its supervisory role also covers ensuring that portfolio holdings reflect the name, the investment objective, the strategy, and the characteristics displayed to investors in the documentation.

The data collection processes recently launched by the CSSF would help the Luxembourg regulator to conduct its supervisory duties, in line with the priorities set out in communication of 6 April 2023.

Finally, the CSSF explains its role in international cooperation in sustainable finance and provides for a schedule of supervision exercises at the initiative of the European authorities.

Aurélia Viémont
Partner | Avocat à la Cour

Aurélien Hollard
Partner | Avocat à la Cour

Sarah Hantscher
Managing Associate | Avocat à la Cour

Mélanie Poirrier
Managing Associate | Avocat à la Cour

Julie Pelcé
Managing Associate | Avocat

Anne Picot-Guillot
Professional Support Lawyer

Julien Robert
Professional Support Lawyer | Avocat à la Cour

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