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ARTICLE · 21 DECEMBER 2022

ESMA Consultation On Fund Names Using ESG Or Sustainability-related Terms

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The European Securities and Markets Authority has issued a consultation on draft guidelines on the use in funds' names of ESG or sustainability-related terms.

GlobalFinance and Banking
Matheson Asset Management And Investment Funds Group
Matheson Asset Management And Investment Funds Group
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The European Securities and Markets Authority ("ESMA") has issued a consultation on draft guidelines ("Guidelines") on the use in funds' names of ESG or sustainability-related terms.

The consultation is published in the context of sharp growth in investor demand for investment funds that incorporate ESG factors, which is expected to continue in the future. ESMA notes that this increasing demand with the effective application of existing criteria for sustainability such as the EU Taxonomy has let to concerns in ESMA, particularly in relation to the risk of greenwashing.

ESMA is of the view that funds' names should be supported in a material way by evidence of sustainability characteristics or objectives that are reflected fairly and consistently in the funds' investment objectives and policy. In its supervisory briefing issued in May 2022, ESMA provided some principles-based guidance for funds' names with ESG and sustainability-related terms. This consultation

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