The clock is ticking: ESG in fund names? From 21 May, the 80% rule will apply to existing funds.

New ESMA guidelines raise the bar for funds with sustainability in their name

Investors and regulators increasingly demand clarity: when can a fund truly be called ‘sustainable’ or ‘ESG’?

The European Securities and Markets Authority (ESMA) has issued a clear answer. Since November 2024, new guidelines on fund names have applied to all newly created funds. And importantly: as of 21 May 2025, these rules will also become mandatory for all existing funds.

What do the guidelines say?

If a fund uses terms such as ESG, sustainability, impact, green, social, transition - or similar terms in any EU language - the following requirements apply:

• Allocate at least 80% of its investments to environmental or social objectives, based on binding elements of the fund’s strategy (as disclosed under SFDR and EU taxonomy rules).

• Exclude investments in companies active in controversial sectors such as fossil fuels, weapons, tobacco, or those associated with human rights violations.

• If the term “sustainability” is used, the fund must also demonstrate a meaningful commitment to sustainable investments under SFDR Article 2(17).

Who is affected?

These rules apply to:

• UCITS management companies and funds

• AIFMs, including internally managed AIFs

• EuVECA, EuSEF, ELTIF and Money Market Fund managers

  
  

Why it matters

A fund’s name is often the first piece of information a potential investor sees. ESMA aims to combat greenwashing and ensure that fund marketing is fair, clear and not misleading.

🚨 Deadline Alert: 21 May 2025

Existing funds using ESG- or sustainability-related terms must revise their investment strategy, disclosures, and marketing materials by 21 May 2025. After that, full compliance is expected from regulators.

💬 Are you a fund manager, advisor or compliance officer? Make sure your funds are ready. The costs of non-compliance—reputational and regulatory—could be high.

Questions? Please contact Miranda.haak@dufinco.nl or Reineke.knook@dufinco.nl.