ESMA Provides Guidelines for Funds’ Use of ESG Related Terms
Published 17 June 2022
Category: Impact and ESG
On 31 May 2022, the European Securities and Markets Authority (ESMA) published a supervisory briefing which provides guidance on sustainability risks and disclosures in investment management.
The supervisory briefing touches upon areas such as fund documentation and marketing, and it puts forward a principles-based guidance on fund names.
ESMA underlines the importance in avoiding misleading fund names. The use of ESG-related terms such “sustainable”, “ESG”, “green”, “ethical”, “social”, “impact” etc. should reflect the fund’s actual investment objectives as well as its strategy and policy.
More specifically, ESMA recommends that only funds disclosing under SFDR Art. 9, funds disclosing under SFDR Art. 8 which in part invest in economic activities that contribute to environmental or social objectives and lastly funds disclosing under TR Art. 5 make use of “sustainable” and “sustainability” in its name. Further, impact-related terms should be reserved to funds whose investments are made with the purpose of generating positive, measurable social and environmental impact. As a basis for comparison, ESMA has given non-exhaustive examples of fund names using ESG-related terms which they consider acceptable respectively non-acceptable.
In relation to a fund’s sustainable investment policy, objectives and strategy, ESMA underlines that any sustainable objectives and characteristics always should be identified and be specific. Further, policies and strategies must correspond to claims made by the fund in its documentation and marketing material, and the management of the fund should be based hereon.
The supervisory briefing is non-binding but is published based on a wish to promote common supervisory practices and approaches and thereby securing supervisory convergence and increasing transparency for investors. Thus, we expect the Danish FSA to take ESMA’s guidelines closely into consideration when assessing funds’ use of ESG-related terms.
The European Securities and Markets Authority (ESMA) is an independent EU authority working towards enhanced investor protection and stable, orderly financial markets. ESMA promotes supervisory convergence amongst its member states’ national competent authorities (NCAs) and works together with other financial European supervisory authorities towards securing this.
Go read the full supervisory briefing here.
Also tagged ‘Disclosure Requirements’
ESMA announces European Common Enforcement Priorities for corporate reporting
The European Securities and Markets Authority (“ESMA”) has issued its annual European Common Enforcement Priorities Statement for corporate reporting.
CSRDDisclosure RequirementsSustainabilityNon-financial reporting under the EU taxonomy – Theme inspection by the Danish FSA
The Danish FSA has completed a theme inspection regarding financial market participants and companies reporting under the EU taxonomy.
Disclosure RequirementsSustainabilityThematic review of pension funds subject to SFDR article 8
The Danish Financial Supervisory Authority initiated an inspection of three pension funds’ disclosing pursuant to SFDR article 8 in November 2023.
ComplianceDisclosure RequirementsSustainabilitySummary report of the consultations on the implementation of SFDR
The European Commission initiated in September 2023 public and targeted consultations on the implementation of the SFDR running until 22 December 2023. A summary of the contributions on the consultations have now been published in a summary report.
Disclosure RequirementsRegulatory Technical StandardsSustainabilityThe Danish FSA: Investment Managers must be better at disclosing sustainability related information
The Danish Financial Supervisory Authority has in a thematic review assessed several sustainability related issues at two investment managers.
Disclosure RequirementsSustainabilityFinal Report with amendments for RTS
The European Supervisory Authorities (EBA, EIOPA and ESMA) (together ESAs), published a Final Report with proposed amendments to the Commission Delegated Regulation (EU) 2022/1288 and the Regulatory Technical Standards (RTS) in December 2023.
Disclosure RequirementsESMARegulatory Technical StandardsSustainabilityChanges to the SFDR RTS proposed by ESA Final Report
The European Supervisory Authorities (EBA, EIOPA and ESMA) (together ESAs), published a Final Report with proposed amendments to the SFDR Delegated Regulation (Regulation (EU) 2022/1288) and the SFDR Regulatory Technical Standards (RTS) in December 2023.
Disclosure RequirementsESMARegulatory Technical StandardsSustainabilityEU Green Bond Regulation enters into force
The EU Regulation (EU) 2023/2631 of the European Parliament and of the Council of 22 November 2023 on European Green Bonds and optional disclosures for bonds marketed as environmentally sustainable and for sustainability-linked bonds (the “EU Green Bond Regulation”) has been published in the Official Journal of the EU and enters into force 20 December 2023.
Disclosure RequirementsGovernanceSustainabilityConsultations on the implementation of SFDR
On 14 September 2023, the European Commission initiated two consultations on the implementation of SFDR. The consultations focus on, among others, the regulation’s useability and role in combatting greenwashing.
Disclosure RequirementsRegulatory Technical StandardsSustainabilityMemo from the Danish Financial Supervisory Authority on periodic reporting
On 30 August 2023, the Danish Financial Supervisory Authority (“DFSA”) published a memo describing the requirements in SFDR art. 11 for periodic reporting.
ComplianceDisclosure RequirementsSustainabilityUpdated guide on the SFDR and Taxonomy Regulation
The updated guide takes regulation and guidance from public consultations and Q&A’s since July 2022 into account. Further, it reflects the most recent market practice on the application of the regulations.
ComplianceDisclosure RequirementsSustainabilityEU Commission answers questions on interpretation of SFDR
The EU Commission has published its answers to questions on the interpretation of SFDR. The questions were put forward by the ESAs in September 2022 in order to receive clarification within central aspects of SFDR.
Disclosure RequirementsSustainabilityEU Commission answers questions on interpretation of SFDR
The EU Commission has published its answers to questions on the interpretation of SFDR. The questions were put forward by the ESAs in September 2022 in order to receive clarification within central aspects of SFDR.
Disclosure RequirementsSustainabilityConsultation on the ESAs review of SFDR
The European Supervisory Authorities (EBA, EIOPA and ESMA) have earlier this month published a consultation paper in which they propose amendments to the Commission Delegated Regulation.
Disclosure RequirementsESMARegulatory Technical StandardsSustainabilityNew rules on severance pay to managers of AIFMs adopted
On 18 April 2023, the Danish Parliament has adopted the proposal to amend the Danish financial regulation, including the Danish Alternative Investment Fund Managers Act.
Danish RegulationDisclosure RequirementsManagement RemunerationThematic review of sustainability disclosures for funds with sustainable investment as the objective
On 3 February 2023, the Danish Financial Supervisory Authority (“DFSA”) published a thematic review of sustainability disclosures for eight funds with sustainable investments as their objective.
ComplianceDisclosure RequirementsSustainabilityNew rules on severance pay to members of the management of AIFMs
On 8 February 2023, the Danish Government presented a proposal for amendments in the Danish financial regulation, including the Danish Alternative Investment Fund Managers Act.
Danish RegulationDisclosure RequirementsManagement RemunerationAmendments to the SFDR RTS Adopted by the European Commission
On 31 October 2022, the European Commission adopted amendments to the Commission Delegated Regulation (EU) 2022/1288 determining regulatory technical standards (RTS) for the SFDR. The amendments aim to ensure that disclosures in future will ensure full transparency about investments in the sectors covered by the Complementary Delegated Act.
Disclosure RequirementsNew Guide on SFDR and EU Taxonomy Regulation
Invest Europe has published a comprehensive members guide on EU ESG reporting requirements for fund managers to clarify grey areas that exist around the day-to-day application of the regulation.
ComplianceDisclosure RequirementsSustainabilityAuthorised AIFMs’ Integration of Sustainability Factors and Risks Applies from 1 August 2022
Authorized AIFMs shall from 1 August 2022 ensure that their systems, processes, and internal controls reflect relevant sustainability risks as defined in the SFDR.
AIFMDComplianceDisclosure RequirementsSustainabilityFinal Regulatory Technical Standards for SFDR and Taxonomy Regulation are Published
The RTS will define the new standard for sustainability-related disclosures in the financial services sector in the EU and supplements provisions of the SFDR and of the Taxonomy Regulation.
AIFMDComplianceDisclosure RequirementsSustainabilityInvest Europe to set ESG Reporting Standards
In November 2021, Invest Europe released its Climate Ambition in which the association committed to contribute to the EU becoming climate-neutral by 2050 and pledged to help the P/E and VC industry move towards net zero.
AIFMDComplianceDisclosure RequirementsSustainabilityThe Danish FSA: Significant Room for Improvement for SFDR Disclosures
The Danish FSA has assessed the quality of 4 pension companies and eight credit institutions' website disclosures with regards to information about their policies on the integration of sustainability risks in the investment decision-making process.
AIFMDComplianceDisclosure RequirementsSustainabilityApplication of SFDR Level 2 Obligations Delayed (Again)
The European Commission has once again delayed the application of the level 2 obligations of the Sustainable Finance Disclosure Regulation (SFDR) until January 2023.
AIFMDComplianceDisclosure RequirementsSustainabilityESA Publishes Joint Supervisory Statement on the Interpretation on Fund Managers’ ESG Disclosure Obligations
From 10 March 2021, fund managers are required to make certain ESG disclosures available on their website and in their pre-contractual disclosures to investors.
AIFMDComplianceDisclosure RequirementsSustainabilityESA Consults on Fund Managers’ ESG Disclosure Obligations
The European Supervisory Authorities (ESA) has published draft technical standards setting out detailed rules on i.a. fund managers’ obligations under the ESG Disclosure Regulation.
AIFMDComplianceDisclosure RequirementsSustainabilityProposal to Transpose DAC6 into Danish Law Presented in the Danish Parliament
On 6 November 2019 the Danish government presented its proposal to transpose the EU directive regarding mandatory reporting in relation to arrangements with cross-border implications (“DAC6”) into Danish law.
ComplianceDAC6Disclosure RequirementsESA issues Joint Supervisory Statement on the Application of Scope of the PRIIPs Regulation to Bonds
The statement seeks to mitigate the risk of divergent application, by national competent authorities, for determining the type of bonds for which it is necessary to draw up a Key Information Document (KID).
Disclosure RequirementsESMAKID / PRIIPSOther updates
Repeal of rules regarding shareholder loans and other amendments to the Danish Companies Act
On 19 December 2024, the Danish Parliament has adopted the amendment acts L71 and L72 regarding amendments to the Danish Companies Act and other Danish laws.
Venture CapitalAbolition of the ‘entrepreneur tax’ and other changes to Danish tax legislation adopted
On 19 December 2024, amendments to the Danish Corporation Tax Act, the Danish Capital Gains Tax Act and the Danish Personal Tax Act, as well as other Danish tax laws, were adopted by the Danish Parliament.
Venture CapitalThe Danish Financial Supervisory Authority publishes guiding statement on alternative investment fund managers’ inclusion of leverage in unlisted companies and issuers
On 17 December 2024, the Danish Financial Supervisory Authority (Danish FSA) published a guiding statement regarding the inclusion of leverage by alternative investment fund managers (AIFMs) in unlisted companies and issuers.
AIFMDDanish RegulationESMAThe Danish FSAThe Danish FSA’s role in the sustainability reporting in 2025
The Danish Financial Supervisory Authority (“FSA”) has published a short press release regarding their role in relation to the sustainability reporting in 2025.
CSRDProposal on independent providers of audit services regarding sustainability reporting
The Danish Parliament has presented a proposal for legislation on independent providers of audit services regarding sustainability reporting.
CSRDInvest Europe launches enhanced ESG reporting template
Invest Europe has launched an enhanced ESG reporting template to drive convergence and support early-stage investors developed with Venture ESG.
CSRDSFDR