Sustainability Markets Insights on Fund Naming Guidelines

This document is a newsletter that discusses the impact of the European Securities and Markets Authority (ESMA) fund naming guidelines on sustainable investment funds. It outlines the recent trends in sustainable fixed income funds, noting a significant inflow of $14 billion in Q1 2025, despite an overall outflow of $8.6 billion from sustainable funds globally during the same period. The guidelines, which came into effect on May 21, 2025, require funds with sustainability-related terms in their names to meet specific criteria to reduce greenwashing risks. The document details how these guidelines have led to a review of fund names and benchmark indices, with many funds adjusting their naming conventions to comply. Additionally, it discusses the implications for the investable universe and the potential for both pessimistic and optimistic outcomes regarding sustainability practices in investment. The newsletter emphasizes the role of investors in advocating for sustainability and engaging with policymakers to enhance sustainability-related performance.