ARTICLE
20 December 2024

"Meaningfully Investing In Sustainable Investments" Clarified For ESMA ESG Fund Name Guidelines

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On 13 December 2024, the European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has published Q&As with further details on three specific aspects of the practical application...
United States Finance and Banking

On 13 December 2024, the European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has published Q&As with further details on three specific aspects of the practical application of their Guidelines on funds' names using ESG or sustainability-related terms (the Guidelines).

The Q&As cover:

  • "meaningfully investing in sustainable investments" with confirmation that EU regulators should interpret this as follows – funds may not be "meaningfully investing in sustainable investments" if they contain less than 50% of sustainable investments. This is aligned with the earlier consultation paper by ESMA on the proposed Guidelines but did not make it through to the final Guidelines – it is welcomed clarity;
  • controversial weapons with the Q&A on this specifying that the reference for the exclusion related to controversial weapons should be the one referred to in the Sustainable Finance Disclosure Regulation principal adverse impact indicator 14; and
  • green bonds with the relevant Q&A explaining that investment restrictions related to the exclusion of companies do not apply to investments in European Green Bonds. For other green bonds, fund managers may use a look-through approach to assess whether the activities financed are relevant for the exclusions.

ESMA sets out that the objective of the Q&As is to "ensure a smooth application of the Guidelines through common understanding of key concepts".

The Q&As can be accessed per topic area here.

"Meaningfully Investing In Sustainable Investments" Clarified For ESMA ESG Fund Name Guidelines

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