Background
On 22 October 2024, the Commission de Surveillance du Secteur Financier (CSSF) released Circular 24/863, which enforces the European Securities and Markets Authority (ESMA) Guidelines on funds’ names using ESG or sustainability-related terms (the “ESMA Guidelines”).
This publication follows the translations of the ESMA Guidelines into all EU official languages, published on 21 August 2024.
Regulatory requirements
The ESMA guidelines set out requirements for funds using ESG, impact, transition or sustainability related terms in their name, such as having at least 80% of investments aligned with ESG or sustainable objectives or/and investments exclusions. For more details on the ESMA Guidelines, please see our client note.
The CSSF also requires clear and adequate disclosure in the pre-contractual documentation to justify the use of ESG or sustainability-related terms in the fund name.
Application – Scope, Timing and Fast-Track Process
The ESMA Guidelines apply to the following entities:
- EU UCITS managed by management companies;
- Self-managed EU UCITS;
- AIFMs; and
- Self-managed alternative investment funds.
Given the non-exhaustive list of the terms considered ESG, impact, transition or sustainability related in the ESMA Guidelines, fund managers must determine whether the guidelines shall apply, regardless of the disclosure status under SFDR Articles 6, 8, or 9.
The ESMA Guidelines will start applying:
- For new funds, on 21 November 2024; and
- For existing funds, on 21 May 2025.
For existing funds, the CSSF offers a priority processing procedure (“PPP”) to simplify amendment(s) under the ESMA Guidelines. This fast-track process is designed for minor amendments, such as changes to a sub-fund name or adjustments to the ESG engagement/SFDR precontractual disclosure.
For further conditions and modalities, please refer to the CSSF Fund naming confirmation letter.
