Crack Down On Fund Mislabelling: New ESG Fund Name Guidelines On The Horizon

This chapter is featured in Chambers and Partners Expert Focus guide, published in February 2024.

Investor demand for investment funds that incorporate environmental, social, and governance (ESG) factors has grown and will continue to grow in the future. In this context, the name of a fund is important as it is usually the fund's first attribute that investors see and therefore has the potential to have a significant impact on their investment decisions. Financial services regulators are aware of this too and have concerns regarding the risks of greenwashing.

There are currently no binding rules in force at the EU level in this respect and, in this context, the European Securities and Markets Authority (ESMA) now intends to issue guidelines on funds' names using ESG or sustainability-related terms. The ESMA has already published a supervisory briefing on 31 May 2022 containing, inter alia, principle-based guidance on fund names with ESG and sustainability-related