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ARTICLE · 21 NOVEMBER 2024

Final Countdown: ESMA Guidelines On Funds' Names Using ESG Or Sustainability-Related Terms

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Over the past few years, there has been a sharp increase in funds using environmental, social, governance ("ESG"), sustainability, impact or sustainable development goals ("SDG")...

European UnionFinance and Banking
Sukhvir K. Basran
Sukhvir K. Basran
Konstantin Burkov (Costa)
Konstantin Burkov (Costa)

Over the past few years, there has been a sharp increase in funds using environmental, social, governance ("ESG"), sustainability, impact or sustainable development goals ("SDG") references in fund names. With this has come heighted scrutiny of potential greenwashing risk. In May 2024, the European Securities and Markets Authority ("ESMA") published its final report "Guidelines on funds' names using ESG or sustainability-related terms" ("ESG Fund Names Guidelines") to address potential greenwashing risk.

SCOPE AND IMPLEMENTATION

The ESG Fund Names Guidelines apply to Undertakings for Collective Investment in Transferable Securities ("UCITS") Management Companies and Alternative Investment Fund Managers ("AIFMs") (together "Fund Managers") in relation to UCITS and Alternative Investment Funds ("AIFs") that they manage (collectively described as "funds" in this update). It regulates the naming of such funds to prevent greenwashing and to ensure that investors

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