Key takeaways
- The new ESMA fund name guidelines aim to enhance transparency and prevent greenwashing in investment funds, ensuring that fund names accurately reflect their investment strategies and objectives.
- Adjustments have been made to a selection of fund names and to investment policies.
In May 2024, ESMA published the new ESMA fund name guidelines, focusing on the use of ESG or sustainability related terms in funds.
The guidelines aim to enhance transparency and prevent greenwashing in investment funds, ensuring that fund names accurately reflect their investment strategies and objectives.
Why are they focusing on fund names?
Investors can use a fund’s name as a way of gauging if it’s something they are interested in or not. These new guidelines aim to give investors more clarity. The guidelines seek to ensure that fund names reflect the investment strategy, are not misleading and that they represent the investment approach.
How will the guidelines support investors?
By improving transparency and increasing clarity investors will be better equipped to identify the best investment strategy that aligns with their values and investment goals.
What should you know about the guidelines?
There are two main rules to keep in mind – the minimum investment threshold and the exclusion criteria.
If a fund’s name includes an ESG or sustainability related term then the minimum investment threshold applies. This means that to use the terms at least 80% of its investments needs to align with environmental or social characteristics or sustainable investment objectives. There are also additional specific investment rules that apply for certain terms such as 'transition', 'improve', 'impact' and 'sustainable'.
It is important to note that these guidelines don’t apply to green, social and sustainable bonds. In December 2024, ESMA confirmed that investment restrictions related to the PAB/CTB exclusions of companies do not apply to investments in green bonds issued under the recent “EU Green bond standard” regulation which is a voluntary label.
The guidelines also specify exclusion criteria. If a fund name uses specific terms like 'environmental', 'impact', 'transition', 'social', 'governance' or other sustainability terms, then they need to reflect the adoption of precise investment exclusions as adopted by climate benchmarks such as the Climate Transition Benchmark (CTB) or the Paris Aligned Benchmark (PAB) exclusions.
It is important to note that these guidelines don’t apply to green, social and sustainable bonds. In December 2024, ESMA confirmed that investment restrictions related to the PAB/CTB exclusions of companies do not apply to investments in green bonds issued under the recent “EU Green bond standard” regulation which is a voluntary label.
What does this mean for Amundi funds?
At Amundi, we decided to use the introduction of the new guidelines to review our active product range and go beyond the recommendations set out in the guidelines. We wanted to go further and provide the maximum clarity possible for investors helping them select the best solutions to achieve their financial objectives and align their investments with their values.
There will be two different types of changes implemented
Part of our funds will change their name to clearly declare their nature, while others will adjust their investment policies, notably to comply with the applicable exclusions (CTB/PAB). It’s important to note that some funds have increased their ESG related constraints, but no fund has reduced its Responsible Investment ambitions. These changes will be implemented to existing funds from 28 April 2025.
Shareholder notice
Shareholder notice
To find out more please view our Shareholder notice
Source: ESMA Final Report on the Guidelines on Funds' Names; Guidelines on Funds' Names Using ESG or Sustainability-Related Terms.