By: Áine Ní Riain and Gayle Bowen
The Central Bank of Ireland (CBI) has announced a streamlined filing process for Irish UCITS and AIFs seeking to change their name to comply with the European Securities and Markets Authority’s guidelines on funds’ names using ESG or sustainability-related terms (the Guidelines).
Read MoreBy Cheryl L. Isaac, Matthew J. Rogers, and Benjamin C. Skillin
On 20 September 2024, the Commodity Futures Trading Commission (CFTC) released final guidance regarding the listing of voluntary carbon credit (VCC) derivative contracts on CFTC-registered exchanges known as designated contract markets (DCMs). VCCs are tradable, intangible instruments issued by a carbon crediting program and generally represent the equivalent of one metric ton of carbon dioxide avoided or removed from the atmosphere. As with other commodities, the CFTC does not have regulatory authority over VCCs, but can promulgate guidance and regulations related to derivatives on VCCs.
Read MoreBy: Jim Bulling and Anthony Shorten
Much of the recent media commentary on greenwashing has revolved around enforcement action taken by ASIC against entities who have misled investors or shareholders. However, there has been less discussion on best practices for entities looking to avoid greenwashing.
Read MoreBy: Hilger Von Livonius, Emma O’Dwyer, Aoife Maguire, and Gayle Bowen
On 14 and 15 August 2024, the German Federal Financial Supervisory Authority (BaFin) updated the following guidance notices:
Guidance Notice on marketing of EU UCITS in Germany
Read MoreBy: Emma O’Dwyer, Aoife Maguire, and Gayle Bowen
The UK’s Financial Conduct Authority has put back the opening date for the application gateway for recognition of new UCITS schemes (i.e. those schemes not already registered under the Temporary Marketing Permissions Regime) under the OFR.
Read MoreBy: Lance C. Dial and Pablo J. Man
Yesterday, 14 August 2024, a United States District Court issued a decision in Securities Industry and Financial Markets Association vs. Ashcroft finding that a pair of “anti-ESG” regulations promulgated by the Missouri Securities Division were both preempted by federal law and unconstitutional. While specifically applicable only to the Missouri regulations, this decision sets new guardrails for existing and future state regulation of federally-registered broker-dealers and investment advisers both generally and relating to environmental social and governance (ESG) investing.
Read MoreBy: Matthew Watts, Lisa Lautier, and Dhivya Kalyanakumar
Environmental Futures
In a push to support investors through the energy transition, the Australian Securities Exchange (ASX) has listed a suite of environmental futures contracts on ASX 24 covering:
Read MoreBy: Gayle Bowen and Shane Geraghty
The European Commission (EC) has adopted the long awaited ELTIF 2.0 Delegated Regulation (RTS). Its version rejects a number of key proposals previously introduced by ESMA. In particular, the EC has returned to its original versions of Annex I and Annex II, with minor amendments.
Read MoreBy: Philip Morgan, Andrew Massey, and Omega Modi
An anti-greenwashing rule comes into force in the UK on 31 May 2024. This is the first part of the FCA’s Sustainability Disclosure Requirements.
Read MoreBy: Áine Ní Riain, Dr Philipp Riedl, and Ruth Hennessy.
The European Securities and Markets Authority (ESMA) has published its much anticipated Final Report: Guidelines on funds’ names using ESG or sustainability-related terms (Guidelines).
This follows a consultation on the subject between November 2022 and February 2023 and an update provided by ESMA last December.
Acknowledging the significant impact of fund names on investor decision-making, ESMA has determined that a fund with ESG- or sustainability-related terms in its name must apply at least 80% of its investments to meet environmental or social characteristics or sustainable investment objectives.
The Guidelines also apply exclusion criteria for certain terms in fund names:
Use of “sustainability”-related terms in fund names will require a commitment to “invest meaningfully” in sustainable investments. Similar use of “transition” or “impact” – related terms will require that the relevant fund’s investments used to meet the 80% threshold are on a clear and measurable path to transition or are made with the objective to generate a positive, measurable impact alongside a financial return.
The Guidelines will apply to all EU UCITS and EU AIFs, and it currently seems likely that they will also apply to non-EU funds marketed into the EU (this is a point on which we will be watching developments closely).
The Guidelines are expected to come into force in Q3 or Q4 2024, subject to completion of administrative formalities including a decision by national competent authorities on whether to apply them locally (which is generally expected). Existing funds will have an additional 3-month transition period before compliance becomes mandatory.
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