GE BaFin ESG Terms in Fund Names


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
Countries Germany
Category
State
Products Commodities; Fund Mgt; Hedge Funds; Mutual Funds
Regions EMEA
Rule Type Final
Rule Date 10/1/2024
Effective Date 11/21/2024
Rule Id 228443
Linked to Rule :153820
Reg. Last Update 10/1/2024
Report Section EU

Last substantive update on 10/04/2024