ESMA guidelines tackle greenwashing via fund names

The European Securities and Markets Authority (ESMA) published its final report containing guidance for the use of environmental, social, and governance (ESG)- and sustainability-related terminology in fund names.

The guidance, issued Tuesday, follows a consultation launched in November 2022 that reflected ESMA’s view that ESG- and sustainability-related terms in fund names “should be supported in a material way by evidence of sustainability characteristics or objectives that are reflected fairly and consistently in the fund’s investment objectives and policy.”

ESMA said in a press release the guidance would apply three months after translation and publication onto the regulator’s website, with a transition period of six months.