On Oct. 1, GE BaFin will follow ESMA guidelines on ESG fund names.
GE BaFin confirmed that it will follow ESMA's guidelines on fund names that use terms related to environment, society and good governance (ESG) or sustainability.
Follows ESMA Aug. 2024 published translations in all the official EU languages of its Guidelines on funds' names using ESG/sustainability-related terms, see #153820.
Overview
The new rules specify the conditions under which a fund can use words such as environment, social, governance or other sustainability-related terms in its name.
The name is often the first piece of information investors perceive about a fund.
It can therefore significantly influence whether and how they invest their money.
The new rules are intended to prevent investors from being misled by sustainability-related terms in the fund name – and thus strengthen confidence in the products.
Funds that use term 'environment' in their name, for example, must now invest 80% of the fund's assets in an environmentally sustainable way, according to guidelines.
In addition, the fund management must observe certain minimum exclusions.
This means that it is not allowed to invest in certain companies, such as those that earn their money mainly from the mining of lignite and hard coal.
Effectiveness
The instructions apply to new funds from Nov. 21, 2024.
Regulators
GE BaFin
Entity Types
HF; IA; Inv Co
Reference
PR, 10/1/2024; ESMA34-1592494965-657; ESG
Functions
Compliance; C-Suite; Environment; Product Design; Social
