The European Securities and Markets Authority (ESMA) has published new guidelines on the naming of sustainability-related funds.

Funds with terms such as “Environmental”, “Impact”, “Transition” or “Sustainability” in their name must prove that at least 80% of the fund’s investments actually serve to achieve environmental, social or sustainable investment objectives.

The aim is to prevent misleading claims and greenwashing.

The guidelines will be translated into all EU languages and published on the ESMA website. Existing funds have six months from publication to adapt, while new funds must implement the guidelines immediately.