Saint Helena to Adopt EU’s ESMA Guidelines on Funds’ Names Using ESG or Sustainability-Related Terms

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The European Securities and Markets Authority (ESMA) has published its final report on guidelines for funds’ names using environmental, social, and governance (ESG) or sustainability-related terms. The guidelines aim to ensure that investors are protected from unsubstantiated or exaggerated sustainability claims in fund names, while providing asset managers with clear criteria to assess their ability to use such terms.

Key Requirements

• A minimum threshold of 80% of investments must be used to meet environmental, social characteristics, or sustainable investment objectives.
• Exclusion criteria for different terms used in fund names, including:
  • “Environmental”
  • “Impact”
  • “Sustainability”-related terms
  • “Transition”
  • “Social”
  • “Governance”-related terms

Combination of Terms

In cases where a combination of terms is used, further criteria are specified in the guidelines.

Overview and Consultation

The report provides an overview of the responses ESMA received to its consultation paper and explains how it addressed comments from stakeholders.

Implementation Timeline

• The guidelines will be translated into all EU languages and published on ESMA’s website.
• They will come into effect three months after publication.
• Competent authorities must notify ESMA whether they comply with the guidelines within two months of their publication.
• Funds existing before the application date will have a six-month transitional period to adjust, while new funds created after the application date must apply the guidelines immediately.

Contact Information

For further information, please contact Cristina Bonillo and Dan Nacu-Manole at press@esma.europa.eu.