On 21 October 2024, the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) published a communication informing market participants of the publication of Circular 24/863, implementing ESMA’s guidelines on funds’ names using ESG- or sustainability-related terms (the Guidelines).
The CSSF reminded that the Guidelines apply to new funds from 21 November 2024 and that existing funds are subject to a six-month transition period until 21 May 2025.
Together with Circular 24/863, the CSSF outlined its supervisory expectations confirming that:
- the Guidelines are applicable regardless whether the funds are disclosing under Article 6, 8 or 9 SFDR;
- the names of the funds should not be misleading in light of the sustainability characteristics of the fund;
- adequate disclosure supporting the fund's name should be reflected in the precontractual documentation;
- the list of ESG and sustainability-related terms mentioned in the Guidelines is not exhaustive;
- market participants are expected to closely monitor and take due consideration of any further developments on this topic at European level.
Finally, it is worth noting that, similarly to the “fast-track procedure”[1] introduced with the staged application of SFDR[2], the CSSF established a priority processing procedure addressed to existing funds for the filing of updated precontractual documentation in view of the implementation of the Guidelines. To benefit from this accelerated procedure, the following conditions must be met:
- the amendment(s) made to the issuing document/prospectus of the fund are limited to either (i) a name change of one or several sub-fund or (ii) minor adjustments to the ESG engagement of the fund and SFDR pre-contractual disclosures.
- the filing of the amended issuing document/prospectus is accompanied with the fund naming confirmation letter, available on the CSSF website, duly completed;
- it is confirmed that, inter alia, the modifications brought to the issuing document/prospectus should, inter alia, not have a negative impact on the expectations of the investors with regards to the return and/or ESG engagement and the marketing communication will be in line with and will not contradict the changes inserted thereof.
If you are seeking assistance with respect to the implementation of the Guidelines, please contact our experts, Aurélien Hollard, Julie Pelcé or Julien Robert.
If you are interested in knowing more and receiving our short guide on the key elements required to comply with the new Guidelines, please reach out to our team.
[1] Communication on the SFDR fast track procedure and the deadline of 10 March 2021 – CSSF
[2] Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial sector
