ESMA Guidelines on funds’ names using ESG or sustainability-related terms

New European Guidelines issued by the European Securities and Markets Authority (ESMA) were required to be implemented by 21 May 2025 that will make funds liable, if they advertise with ESG or sustainability-related terms in the fund name (ESMA34-1592494965-657).

The Guidelines are intended to protect investors from unfounded or exaggerated sustainability claims in the names of funds. In turn, fund managers should be provided with clear criteria that they can use to judge whether they are allowed to use such terms in the names of their funds.

For the first time the Guidelines determine throughout Europe that a minimum threshold of 80% of investments should be used in order to be allowed to use ESG-related terms. This means that if the name implies a specific ESG investment goal then at least 80% of the management assets must also meet this objective. In addition, special requirements exist respectively for funds names related to sustainability, transformation as well as impact. Moreover, the Guidelines also contain criteria for exclusion: Depending on the ESG-related term in the fund name, investments in companies from certain sections are also not permitted. Generally the respective ESG-related terms are always to be assessed within the context of the specific fund in question. The impression given towards investors is of primary importance.

The following FMA information document contains further details regarding the requirements under the ESMA Guidelines on funds’ names using ESG or sustainability-related terms: Reden wir über Aufsicht - ESG-Fondsnamen (Format: pdf, Size: 218,1 KB, Language: German).