A fund's name is a central element in marketing, and it is important the name is not misleading, implying a name must be substantially supported by the fund's objectives.
The guidelines are based on a number of principles All funds with ESG or sustainability-related concepts in the name, Funds with social, transition or management-related concepts in the name, and all Funds with sustainability-related concepts in the name.
Also Funds with environmental (incl. ESG and SRI), impact or sustainability-related concepts in the name, which comply with exclusion rules for Paris Aligned Benchmark.
For funds that use combined terms, the requirements will generally apply cumulatively.
For combinations where transition-related concepts are included with environment-related concepts, the fund must meet rules for funds with transition-related concepts.
Funds using transition-related concepts in a name must ensure that the investments are on the way to social or environmental transition, and path is clear and measurable.
Funds that use impact-related concepts in the name should ensure that investments do all generate both a positive and measurable impact, together with the financial return.
DEN FSA Comments
Final guidelines contain key terms and words that may fall under different categories.
Concepts and words are not exhaustive, and it will be a concrete assessment which criteria a fund must meet if concepts used in naming do not appear in the guidelines.
DEN FSA has observed use of word responsible in the names of Danish foundations.
Responsible is not included in the list of key terms in guidelines, but DEN FSA assesses use of word responsible will initially fall under the ESG and SRI, which appear in list.
The use of sustainability-related terms requires meaningful investment in sustainable investments, as defined in Article 2, No. 17, of the SFDR, to the extent that it reflects all of the expectations investors can reasonably have, based on the name of the fund.
In light of the guidelines for naming funds, it will be DEN FSA's expectation that the pre-contractual documents for the fund, typically the prospectus and the prospectus annex, clearly state conditions to support the name of ESG or sustainability-related.
This means that it must state how funds fulfill criteria for name in question, including use of exclusion criteria for Climate Transition Benchmark or Paris Aligned Benchmark.
Effectiveness
The guidelines apply from Nov. 21, 2024 for all of the funds established after this date, and for funds established before this date, the guidelines will apply from May 21, 2025.
