The European Securities and Markets Authority published research on the impact of its fund naming guidelines for ESG and sustainability-related terms, concluding that they have improved consistency between fund names and investment strategies and reduced greenwashing risks. Using nearly 1,000 shareholder notifications linked to the guidelines from the 25 largest EU asset managers (EUR 7.5 trillion in assets under management), the analysis found that 64% of referenced funds changed their name, most often to avoid ESG-related terminology, and 56% updated their investment policies to strengthen their sustainability focus. A separate review of fossil-fuel related exclusions across 4,000 EU funds using ESG terminology in their names (EUR 2 trillion in assets under management) indicates that higher fossil fuel exposure increased the likelihood of removing ESG terms, while funds that kept ESG terms reduced their fossil fuel holdings’ portfolio share more than other funds. ESMA will present the findings in a webinar on 20 January at 10:00, with registration requested by 19 January at 12:00. It also plans to continue monitoring naming trends and engage with the European Commission on evidence-based sustainable finance policymaking.
European Securities and Markets Authority 2025-12-17
European Securities and Markets Authority research finds fund naming guidelines improved ESG term consistency as 64% of notified funds changed names
The European Securities and Markets Authority (ESMA) found that its guidelines for ESG-related fund names improved alignment with investment strategies, reducing greenwashing risks. Analysis of nearly 1,000 shareholder notifications showed 64% of funds changed names, often avoiding ESG terms, and 56% updated policies for greater sustainability focus. A review of 4,000 EU funds indicated higher fossil fuel exposure increased the likelihood of removing ESG terms, while funds retaining ESG terms significantly reduced fossil fuel holdings.