Funds’ names are a powerful marketing tool and the incorporation of eye-catching key-words such as ‘ESG’ or ‘Sustainable’ in the name of a fund can go a long way to attract investors. The issue was raised at the end of 2021 by a survey conducted by Sweden’s financial services authority (FSA), Finansinspektionen, which found evidence of funds making such titular claims without any evidence to that effect.
Now, the European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is taking action. In a recent announcement, ESMA invited Europeans to provide input to a consultation on draft guideline regarding the use in funds’ names of ESG or sustainability-related terms. ESMA will consider all comments received by 20 February 2023.
