Key takeaways
Naming your fund is a big decision. After all, in the name, you might want to convey different values and strengths to your clients. For example, your sustainable investment practices.
Be aware, though, that in the near future, your fund might need to follow guidelines from the European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor.
ESMA plans on introducing “quantitative thresholds for the minimum proportion of investments sufficient to support the ESG or sustainability-related terms in funds’ names”. The initial draft states the following guidelines:
- a quantitative threshold (80%) for the use of ESG related words;
- an additional threshold (50%) for the use of “sustainable” or any sustainability-related term only, as part of the 80% threshold;
- application of minimum safeguards to all investments for funds using such terms (exclusion criteria);
- additional considerations for specific types of funds (index and impact funds).
But ESMA is seeking feedback, and, last week, launched a public consultation with 16 questions about these initial guidelines. The consultation is open for the next 3 months (until 20 February 2023).
How you can participate:
- In ESMA’s website, download the template to the response form (called “Response form - CP on Guidelines on funds names”);
- Follow the instructions in the first three pages. Then fill in the form (from page 4 to 7);
- Save the file version with your answers;
- Then go back to ESMA’s website and upload your file.
Note that while uploading the file, you can choose not to have your response publicly published on ESMA’s website.
Here is the link to the official announcement of the consultation by ESMA.
