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Alignment of portfolio holdings with terminology in the fund’s names​

Policy-makers are adopting rules on the use of sustainability terms in fund names and marketing to reduce greenwashing in multiple regions​.

EU ESMA Fund Naming Guidelines

  • Covers UCITS and AIFs using sustainability terms​*
  • Must have ≥80% investments supporting the selected term(s)​
  • Must exclude investments described in regulation of EU Climate Transition and EU Paris-Aligned Benchmarks​
  • Must only reference benchmarks whose constituents support the selected item(s)
  • Must demonstrate measurable transition path (where using ‘transition’ terms)​

*Sustainability terms include, but are not limited to transition, improve, progress, net-zero, environmental, green, climate, ESG, SRI, social, equality, governance, controversies, impact, sustainable.

ESMA - Guidelines on Funds’ Names Using ESG or Sustainability-Related Terms

UK Sustainable Disclosure Regulation

  • Covers UCITS using sustainability terms or applying the 4 investment Labels​
  • Must have ≥70% of assets supporting the selected label /term
  • Must only reference indices that align with label criteria
  • Must specify measurable KPIs to track progress towards objectives
  • ​Must produce separate consumer facing product documentation​

FCA - Sustainability Disclosure Requirements (SDR) and Investment Labels

US SEC Fund Names Rule

  • Covers US SEC registered funds with ANY label implying an investment strategy
  • Must have ≥80% of assets supporting the selected label / term​
  • New prospectus disclosures defining the terms and fund’s selection criteria
  • Holding-by-holding level disclosures on Form N-PORT

US SEC Final Rule - Investment Company Names

EU ESMA Fund Naming Guidelines

  • Covers UCITS and AIFs using sustainability terms​*
  • Must have ≥80% investments supporting the selected term(s)​
  • Must exclude investments described in regulation of EU Climate Transition and EU Paris-Aligned Benchmarks​
  • Must only reference benchmarks whose constituents support the selected item(s)
  • Must demonstrate measurable transition path (where using ‘transition’ terms)​

*Sustainability terms include, but are not limited to transition, improve, progress, net-zero, environmental, green, climate, ESG, SRI, social, equality, governance, controversies, impact, sustainable.

ESMA - Guidelines on Funds’ Names Using ESG or Sustainability-Related Terms

UK Sustainable Disclosure Regulation

  • Covers UCITS using sustainability terms or applying the 4 investment Labels​
  • Must have ≥70% of assets supporting the selected label /term
  • Must only reference indices that align with label criteria
  • Must specify measurable KPIs to track progress towards objectives
  • ​Must produce separate consumer facing product documentation​

FCA - Sustainability Disclosure Requirements (SDR) and Investment Labels

US SEC Fund Names Rule

  • Covers US SEC registered funds with ANY label implying an investment strategy
  • Must have ≥80% of assets supporting the selected label / term​
  • New prospectus disclosures defining the terms and fund’s selection criteria
  • Holding-by-holding level disclosures on Form N-PORT

US SEC Final Rule - Investment Company Names

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