On 13 December 2024, the European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published Q&As with further details on three specific aspects of the practical application of their Guidelines on funds’ names using ESG or sustainability-related terms (the Guidelines).
The Q&As cover:
- “meaningfully investing in sustainable investments” with confirmation that EU regulators should interpret this as follows – funds may not be “meaningfully investing in sustainable investments” if they contain less than 50% of sustainable investments. This is aligned with the earlier consultation paper by ESMA on the proposed Guidelines but did not make it through to the final Guidelines – it is welcomed clarity;
- controversial weapons with the Q&A on this specifying that the reference for the exclusion related to controversial weapons should be the one referred to in the Sustainable Finance Disclosure Regulation principal adverse impact indicator 14; and
- green bonds with the relevant Q&A explaining that investment restrictions related to the exclusion of companies do not apply to investments in European Green Bonds. For other green bonds, fund managers may use a look-through approach to assess whether the activities financed are relevant for the exclusions.
ESMA sets out that the objective of the Q&As is to “ensure a smooth application of the Guidelines through common understanding of key concepts”.
The Q&As can be accessed per topic area here.
© 2025 Proskauer Rose LLP.
National Law Review, Volume XIV, Number 351