Allianz Global Investors will amend the investment policies of some of its sustainable funds to comply with new guidance from the European Union.
The European Securities and Markets Authority (ESMA) is rolling out stricter rules for how asset managers can use terms like ‘ESG’, ‘climate’ and ‘impact’ in the names of financial products.
The supervisor has asked national regulators to ensure that funds that use such words allocate at least 80% of their assets to suitable investments, to avoid misleading consumers.
Depending on the term used, certain exclusions are also required.
Funds with words associated with ‘sustainability’, for example, are not allowed to invest in tobacco, controversial weapons, companies that violate OECD guidelines or certain utilities and fossil-fuel companies.
The guidance is already in place for new funds, but will come into force for existing funds in May.
A spokesperson for AllianzGI told IPE that, in an effort to comply with ESMA’s guidelines, it had reviewed its fund names and investment strategies.
“Less than 15% of our mutual funds domiciled in the EU have fund names that fall within the scope of the guidelines,” the spokesperson continued.
“For the majority of these affected funds, we have decided to keep the fund name, amending the investment policies where necessary.”
Experts have predicted that nearly half of funds making green or impact-related claims may need to rebrand or adjust their portfolios to comply with the new guidance.
IPE also contacted AXA Investment Management, DWS, Amundi and BNP Paribas Asset Management to ask how they planned to stay on the right side of the rules.
Amundi and BNP Paribas declined to comment, while a spokesperson for AXA IM said the “vast majority” of its funds were already compliant, but it would rename “less than 10 funds”.
A DWS spokesperson said the guidelines affect various funds that fall within the scope of the guidelines.
“These include, for example, DWS Active funds, which generally apply the ‘DWS ESG Investment Standard’ filter and use ESG or sustainability-related terms in the fund name.
“In terms of timing, we intend to implement the requirements of the guidelines in April 2025, subject to the respective regulatory approvals. Detailed information for the respective funds will be contained in the relevant ‘Legal Notice to Shareholders’ published on a DWS website,” the spokesperson said.
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