ESG Update For Funds Offered In The EU: What's In A Name?

Managers that offer ESG-focused funds to European investors should take note of the final "Guidelines on Funds' Names Using ESG or Sustainability-related Terms" ("Guidelines") published by the European Securities and Markets Authority ("ESMA") on 14 May 2024.¹ The Guidelines will affect funds established in the EU and, depending on the approach of the local EU member state regulators, are also likely to affect non-EU funds marketed in accordance with the EU national private placement regimes ("NPPRs") established under the Alternative Investment Fund Managers Directive.

The Guidelines will not apply to non-EU funds that have not been notified for marketing in EU countries, such as when a fund is offered to a professional investor in the EU on the basis of a valid reverse solicitation. Equally, the Guidelines will not apply to funds marketed in the United Kingdom.