The analysis explored compliance with the EU’s naming laws
Analysis of more than 18,000 investment funds across Europe has found that less than 4% would be able to comply with naming laws for ESG funds across key markets.
The research, from technology platform Clarity AI, found that many would have to rename their ESG funds if they wanted to sell across the UK, US and Europe, all of which have different definitions and naming laws for non-financial disclosures and sustainability funds.
“When looking at funds with all three investment fund regimes – the US’, UK’s, and EU’s – we found that over 95% of funds with the word ‘sustainable’, or similar term, would require renaming or restructuring in order to be sold across all three markets,” Clarity AI’s head of product research and innovation Patricia Pina.
“This is not only an added cost in terms of compliance, but also underscores how different actors – in this case regulators – are interpreting the meaning of core concepts like ESG and sustainability.”