Ireland: Implementing ESMA rules on ESG and sustainability related fund names

Why should I read this?

ESMA issued the ‘ESMA Guidelines on funds’ names using ESG or sustainability-related terms’ (the “Guidelines”)  on 21 August 2024. The Guidelines apply to competent authorities, UCITS management companies, UCITS which have not designated a UCITS management company, Alternative Investment Fund Managers, internally managed AIFs, EuVECA managers, EuSEF managers, ELTIF managers and MMF managers.

How do the Guidelines apply at Member State level?

The Guidelines apply in relation to Article 14(1)(a) of the UCITS Directive (2009/65/EC), Article 12(1)(a) of AIFMD (2011/61/EU) and Article 4(1) of the CBDF Regulation ((EU) 2019/1156) and apply in respect of the obligation to act honestly and fairly in conducting their business as well as the obligation that all information included in marketing communications is fair, clear and not misleading.

In the Guidelines ESMA made its expectation clear that the competent authorities should comply by incorporating the Guidelines into their national legal and/or supervisory frameworks as appropriate, including where particular guidelines are directed primarily at financial market participants. In this case, competent authorities should ensure through their supervision that financial market participants comply with the Guidelines.

How is Ireland applying the Guidelines?

On 21 October 2024 the Central Bank of Ireland (CBI) published a ‘Notice of its intention in relation to the Guidelines on funds’ names using ESG or sustainability-related terms’, in which it stated that the CBI will, in due course, consult on the incorporation of related provisions in the Central Bank UCITS Regulations and AIF Rulebook. In the interim, the Central Bank of Ireland expects full compliance with the Guidelines from 21 November 2024. The UCITS update requires legislation which may take some time – we would expect the CBI to update its AIF Rulebook sooner.

How Eversheds Sutherland can help

We regularly advise clients on the growing number of ESG and responsible investing regulatory regimes and products. We work with key industry bodies in the ESG space to ensure we stay at the forefront of regulatory developments and understand the impacts such regulation is likely to have on the sector. We can, among other things, help scope whether products fall within existing and forthcoming regulatory regimes; advise on how to comply with these regimes, including crafting necessary disclosures; and provide bespoke training to help clients build internal awareness.