On 2 October 2023, the European Securities and Markets Authority (ESMA) published a study on environmental, social and governance (ESG) names and claims in the EU funds industry.
This study contributes to ESMA’s on-going monitoring efforts in the area of greenwashing risks, in particular in the investment management sector and supports on-going regulatory efforts regarding ESG disclosure requirements for investment funds. There is currently no EU regulatory definition of an ESG investment product, although several industry and national fund labels exist.
In this study, ESMA shows that the share of EU UCITS investment funds with ESG words in their name has increased from less than 3% in 2013 to 14% in 2023. The study further highlights that fund managers tend to prefer using generic language, rather than more specific words. This can make it more difficult for investors to verify that the fund portfolio is in line with the name.
ESMA will be holding a public webinar on this study and its findings. The webinar will be held online on 18 October 2023.
For further updates on regulatory developments in the ESG space please visit our Financial Services Regulatory Developments in ESG hub.