Investing · Jurisdiction EU

ESG in a fund name

In the EU, ESMA guidelines set when ESG or sustainability words in a fund name are unclear or misleading. The name is not a return promise.

In more detail

As of the ESMA guidelines of 2024: the guidelines require an 80 percent threshold for such terms: the share of investments used to meet the environmental or social characteristics or the sustainable objectives of the binding strategy. Words from 'sustainable' add a commitment to invest meaningfully in sustainable investments as defined in the SFDR. Extra exclusions depend on the term. ESMA says expressly that investors should look past the name into the disclosures.

Background

Read next to the prospectus, ETFs, thematic concentration and costs: a word in the name is a naming rule. It does not prove that the fund matches your values or runs better.

An example

Two funds carry 'ESG' in the name. Whether each meets the 80 percent threshold and the exclusions for its group of words sits in the strategy and the annexes, not in the slogan.

A common misconception

If ESG is in the name, the fund is certified sustainable and high returning.

The ESMA guidelines set thresholds and exclusions for the name. They promise no return and they do not replace the disclosures.

Source: ESMA · Fund names guidelines. Last reviewed: 2026-10-27. Editorially reviewed on 2026-10-27. Next review 2027-10-27. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.