ESMA reviews impact of Guidelines on ESG or sustainability related terms in fund names

The study found that ESMA's Guidelines have:

• Improved consistency in the use of ESG terms by increasing alignment of fund names and their actual investment strategies.
• Enhanced investor protection by reducing greenwashing risks.

Drawing on nearly 1,000 shareholder notifications in reaction to the guidelines from the 25 largest EU asset managers with EUR 7.5 trillion in assets under management, the study found that:

• 64% of the funds mentioned in shareholder notifications changed their name, in most cases to avoid the use of ESG related terminology.
• 56% updated their investment policies to strengthen their sustainability focus.

The study then focuses on the impact of the fossil-fuel related exclusions on 4,000 EU funds using ESG terminology in their names, with EUR 2 trillion in assets under management. The analysis shows that:

• Funds with higher fossil fuel exposures were more likely to remove ESG terms from their names, underscoring how portfolio composition influences compliance choices.
• Since the publication of the guidelines, funds retaining ESG terms in their names have reduced their portfolio share of fossil fuel holdings more than all other funds, suggesting efforts to green their portfolios.

Next steps

A webinar to present the findings will take place on 20 January at 10.00. Please register by 19 January at 12:00.

ESMA remains committed to monitoring fund naming trends and tracking how the market evolves in response to its Guidelines, while engaging with the European Commission to support evidence-based policymaking on ESG and sustainable finance regulation.

Further information:

Ana Dilaverakis

Communications Officer
[email protected]