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ESG Obligations and Disclosure Requirements for Malta Businesses

ESG (Environmental, Social, and Governance) obligations and disclosure requirements have become increasingly essential for businesses in Malta today. The Maltese government has recognized the significance of sustainable practices and responsible corporate behaviour, prompting the implementation of stringent guidelines.

 

These regulations require businesses and corporate finance to integrate ESG considerations into their operations, including environmental conservation, social impact, and governance standards. Additionally, Malta businesses must disclose their ESG performance and initiatives to stakeholders, ensuring transparency and accountability.

What does ESG mean?

With the environmental consequences of economic growth and globalization becoming increasingly apparent, ESG has emerged as a priority on the regulatory agenda.

In recent times, Maltese companies have been actively pursuing sustainable business models. These entities are committing to commercial initiatives that have a positive impact on the environment, thus significantly influencing the social dynamics within the Maltese community. Additionally, they are ensuring the establishment of a strong corporate governance framework.

Malta's Response to ESG and the Path to Regulation

In Malta, there isn’t a specific local law exclusively dedicated to ESG. However, there are various regulations and legislation closely linked to the different aspects of ESG. The regulatory framework for ESG in Malta is primarily based on EU regulations.

In 2015, Malta, along with other governments worldwide, adopted the Paris Agreement on climate change and the UN 2030 Agenda for Sustainable Development. It demonstrates Malta’s commitment to a more sustainable path for our planet and economy.

At the European level, the European Commission (referred to as the ‘Commission’) introduced the European Green Deal in 2019, which serves as a growth strategy to make Europe the first climate-neutral continent by 2050.

This initiative led to the implementation of an action plan for financing sustainable growth, outlining the following key measures:

In the implementation of the action plan, the Commission developed a package of legislative measures, including the EU Taxonomy Regulation, the Disclosure Regulation, and the Benchmarks Regulation. These regulations are directly incorporated into local legislation.

Sustainable finance has been identified as a major priority in the 2019 Strategic Plan of the Malta Financial Services Authority (MFSA). The Commission’s roadmap allowed for adjustments, and as part of the European Green Deal framework, the Commission unveiled a renewed sustainable finance strategy. This strategy proposes various actions, including:

Furthermore, alongside the MFSA’s prominent role in ESG regulation, the Malta Stock Exchange (MSE) also contributes to the development of ESG rules within the local capital markets. The MSE serves as the supervisory body responsible for overseeing the inclusion of green bonds in the Green Bonds Market Segment list of the exchange.

Are there any obligations regarding ESG imposed on entities?

In a letter dated December 16, 2022, the Malta Financial Services Authority (MFSA) addressed Board Members and Compliance Officers of fund managers, self-managed schemes, and third-country fund managers marketing their funds in Malta under the Alternative Investment Fund Managers Directive (AIFMD) national private placement regime. The letter outlined the MFSA’s expectations regarding ESG requirements.

These obligations encompass not only the entity itself but also extend to the specific financial products it provides. Ensuring adherence to these obligations is essential for promoting transparency and accountability in the sustainable finance sector in Malta.

Final Thoughts

In conclusion, ESG obligations and disclosure requirements have become crucial for businesses in Malta. The government’s recognition of the importance of sustainability and responsible corporate behaviour has led to the implementation of stringent guidelines.

By integrating ESG considerations into their operations and disclosing their performance, Malta businesses are contributing to a more sustainable future while fostering transparency and accountability. Embracing ESG principles not only benefits the environment and society but also enhances the long-term viability and reputation of businesses in Malta. 

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