ESMA Q&As on the application of the guidelines on funds’ names using ESG or sustainability-related terms

On 13 December 2024, the European Securities and Markets Authority (ESMA) issued Q&As on the application of its guidelines on funds’ names using ESG or sustainability-related terms (Guidelines).

Background

On 21 August 2024, ESMA announced that it had published translations of the Guidelines in all official EU languages.

Following the publication of the translations:

• Member State competent authorities had to notify ESMA by 21 October 2024 whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the Guidelines.
• The Guidelines applied from 21 November 2024.
• The transitional period for funds existing before the application date is six months after that date (i.e., 21 May 2025). Any new funds created on or after the application date should apply the Guidelines immediately.

Q&As

The Q&As are related to green bonds, the convergence on “meaningfully investing in sustainable investments” and the definition of controversial weapons.

ESMA has decided to clarify the treatment of green bonds because of the imminent application of the European Green Bonds Regulation and the reference in the mandates in the Alternative Investment Fund Managers Directive and UCITS Directive noting that sectoral legislation takes precedence.