European Securities and Markets Authority (ESMA), the European Securities and Markets Authority, introduced guidelines to tackle greenwashing in investment funds amid the surge in ESG-themed fund names, driven by digital demand. European governments, via ESMA, set minimum investment thresholds for ESG-related fund names, aiming to ensure alignment with actual investments. Criticism arose over varying thresholds for ESG and sustainability terms, prompting adjustments.
ESMA removed the 50% sustainability-related threshold, retaining an 80% investment requirement for funds labeled “sustainable” and introducing a transition category. This category, with an 80% investment threshold, fosters investments towards environmental sustainability, while adhering to EU rules, thus navigating the digital landscape of sustainable finance.
