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by
AnhNguyen
- November 7, 2024
Luxembourg’s financial regulator, the CSSF, has rolled out rules aligned with the European Securities and Markets Authority (ESMA) guidelines on ESG-related fund names. These rules require funds using terms like “sustainability,” “impact,” or “governance” in their names to meet minimum investment standards that reflect these themes and apply specific exclusion criteria. This regulation aims to prevent misleading fund names and to ensure that ESG and sustainability claims are supported by the fund’s investments and pre-contractual disclosures.
Effective immediately for new funds formed after November 21, 2024, these guidelines will require existing funds to comply by May 21, 2025, following a transitional period. To ease this process, the CSSF has introduced a priority processing option for funds making only minor adjustments to comply, such as changes to sub-fund names or updating “ESG engagement” disclosures. Funds can apply for priority processing by submitting a confirmation letter detailing their investment strategy and compliance with the ESMA guidelines.
CSSF urges fund managers to reassess fund names and confirm if they meet the new standards. The regulator is expected to scrutinize names suggesting ESG or sustainability claims. The guidelines signal a push for enhanced ESG compliance and transparency in fund naming, reinforcing investor trust and aligning with Luxembourg’s carbon neutral strategy.
Eversheds Sutherland offers advisory services to guide funds through these compliance adjustments and regulatory approvals, ensuring seamless alignment with ESMA and SFDR standards.
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