The EU markets regulator and supervisor ESMA, launched a consultation paper on November 18th, 2022, proposing binding rules on the use of ESG and sustainability-related terminology in the names of investment funds.
The proposal aims to protect investors from greenwashing risks, by ensuring that fund names are not misleading. Funds including terms such as “ESG” or “sustainability” must also reflect the funds’ actual investment policies and objectives.
Specifically, the consultation paper proposes:
Regarding the timeframe, ESMA informed that the consultation will run until February 20th, 2023. Once finalized, the draft guidelines will apply three months after their publication on ESMA’s website in all EU official languages. A transitional period of 6 months is planned to apply for funds already launched before the date of publication.
The consultation comes exactly in times, when also other global regulators such as the UK’s FCA and the US’ SEC are raising the issues linked to misleading funds’ names. On their agenda
Different statistics and sources report about the great reclassification and renaming of sustainable funds, which already started in the last quarter.
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