Guidelines
If a fund marketed under an EU passport (such as an AIF marketed by a licensed AIFM or under the EuVECA/EuSEF/ELTIF label, or a UCITS fund) includes ESG or sustainability related terms in its name, it needs to operate an investment policy which complies with certain requirements depending on the type of term used in the fund name, as indicated below:
Next Steps
The Guidelines will become applicable 3 months after the Guidelines are translated into all EU official languages and published on ESMA’s website, which is currently still awaited. Managers of any new funds created after such date, are required to comply with the Guidelines immediately. Existing funds shall have a transitional period of 6 months, which gives fund managers of existing funds a total of at least 9 months’ to ensure compliance with the requirements laid out in the Guidelines.
To ensure compliance with the Guidelines, fund managers need to make the following assessment: (i) review whether the fund’s name includes a “Transition”, “Environmental”, “Social”, “Governance”, “Impact” or “Sustainability” – related term (or terms derived therefrom); (ii) if it does, assess if the requirements of the Guidelines are met; and (iii) if they are not met, take steps to ensure compliance with the Guidelines (taking into consideration that this likely requires changes to the fund documentation and the SFDR disclosures). We are happy to assist with this assessment.
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