Communication to the investment fund industry in relation to the ESMA Guidelines on funds’ names using ESG or sustainability-related terms

This communiqué is a follow-up to the CSSF communiqué published on 21 August 2024 announcing the publication of the translations of the ESMA Guidelines on funds’ names using ESG or sustainability-related terms (the “Guidelines”) in all EU official languages on the ESMA website .

The CSSF hereby informs market participants of the publication of Circular CSSF 24/863, thereby implementing the Guidelines into the Luxembourg regulatory framework. The CSSF reminds market participants that the Guidelines will start applying to new funds three months after the publication date of the Guidelines in all EU official languages, i.e. on 21 November 2024, with a further six-month transition period for existing funds, so that the Guidelines will apply as from 21 May 2025 to existing funds.

The CSSF expects market participants, regardless of whether they are disclosing under Article 6, 8 or 9 of the SFDR, to carry out a self-assessment of the applicability of the Guidelines to the products they manage and to ensure compliance of fund names with these Guidelines.

In this context, the CSSF reminds market participants of the following principles:

• Funds’ names should not be misleading, as the disclosure of sustainability characteristics should be commensurate with the effective application of those characteristics to the fund.
• The CSSF expects adequate disclosure in the precontractual documentation of elements supporting the use of ESG or sustainability-related terms in funds’ name.
• The list of ESG and sustainability-related terms mentioned in the Guidelines is not exhaustive. Accordingly, market participants are expected to review the names of all the financial products they manage and assess, on a case-by-case basis, whether the Guidelines apply to those products.
• Finally, the CSSF expects market participants to closely monitor and take due consideration of any further developments on this topic at European level.

The CSSF informs market participants that it is granting a priority processing procedure (“PPP”) to existing UCITS and AIFs that limit the update of their issuing document/prospectus to amendments required in the context of the entry into force of the Guidelines. The amendment(s) must be limited to either a name change of at least one sub-fund or minor adjustments to the fund’s/sub-fund’s ESG engagement/SFDR precontractual disclosure.

The conditions and modalities for benefiting from the PPP are further explained in the Fund naming confirmation letter.