Update: New French rules impacting the marketing of ESG

Following up from our update in mid-May 2020, the French regulator has updated their position.

This note seeks to highlight the core changes impacting non-French UCITS passported for sale into France.

Training

• All funds marketed in France prior to 11 March 2020 now have until 10 March 2021 (gaining an extra 4 months) to update their marketing documentation by 30 November 2020; however
• Those funds marked between 11 March 2020 and 27 July 2020 have until 30 September 2020 to implement the new rules; and
• The rules are of immediate impact to newly passported EU UCITS (and newly created French funds).

Concise information in the marketing documentation

Anything more than concise information (which has been defined in detail) in the marketing documentation will cause the fund to be considered to be making the non-financial criterion a central element/key aspect of its communication (triggering the full application of the French rules).

This notion replaces the “very brief and very proportionate” text used previously.

The intermediate approach

One of the criticisms of the AMF’s previous approach was that any communication in the KIID in relation to non-financial criteria would trigger the full application of the French rules.

It is now possible to include language in the KIID without triggering the full application of the French rules. However:

• The language can only be included in the “Other information” section of the KIID; and
• As flagged in 2 above, only concise information can be included in the marketing documented; and
• The majority of the AMF’s positions must still be respected (even if only 2 of the 10 recommendations remain applicable). Note that the “90% analysis rate” can be adjusted for certain investment universes.