Sustainability is no longer an add-on, but a key criterion for modern investment decisions. At the same time, demands for transparency are growing: investors want to know exactly what terms such as "sustainable," "ESG," and "responsible" mean—and whether a fund name is actually backed by binding standards.
To strengthen this trust, the European Securities and Markets Authority (ESMA) published new guidelines in 2024. These guidelines specify the conditions under which funds domiciled in the EU may use certain sustainability terms in their names. In concrete terms, this means that certain companies and business areas must be excluded.
As a Swiss fund provider, this regulation does not actually affect us. However, as three of our funds are domiciled in Luxembourg, we have consistently implemented these requirements for the products concerned – and since spring 2025, they have met all the exclusion criteria.
Why the new rules are important
In recent years, countless funds with sustainability terms in their names have come onto the market. However, it was not always clear to investors which criteria were actually applied. ESMA wants to achieve three things with its requirements:
Greater clarity: Fund names should be understandable and comprehensible.
Greater trust: Investors should be able to be sure that sustainability is not just a label for the fund.
Greater comparability: Those comparing funds should have a better basis for their decision.
In short, the new rules are intended to prevent greenwashing and ensure greater transparency.
What exclusions apply?
In order for a fund to be allowed to use terms such as "ESG," "sustainable," or "responsible" in its name in the future, ESMA requires that certain industries and business practices be excluded. This is based on exclusions from the Climate Transition Benchmark (CTB) and Paris Aligned Benchmark (PAB).
Climate Transition Benchmark (CTB) | Companies involved in controversial weapons |
Companies that produce tobacco | |
Violations of the UN Global Compact | |
Violations of the OECD Guidelines for Multinational Enterprises | |
Paris Aligned Benchmark (PAB) | Companies with >1% of revenue from coal and lignite |
Companies with >10% of revenue from oil | |
Companies with >50% of revenue from gas | |
Companies that generate ≥50% of their revenue from electricity generation and whose greenhouse gas intensity is >100 g CO₂e/kWh |
CTB exclusions apply to companies that operate in particularly problematic areas. These include producers of tobacco or controversial weapons, but also companies that violate international standards such as the UN Global Compact or the OECD Guidelines for Multinational Enterprises. Such companies may not be included in funds with sustainability terms in their names.
PAB exclusions go one step further and focus specifically on climate protection. Here, funds must exclude companies that generate a significant portion of their revenue from coal, oil, or gas. This also includes electricity producers with very high greenhouse gas emissions. This ensures that funds that promise sustainability in their name do not invest in highly emission-intensive business models.
Our implementation
We have gradually implemented the new rules for our Luxembourg funds. Even before 2025, we excluded companies that are involved in controversial weapons or violate international standards.
Since spring 2025, further specific exclusions have been added. This means that companies with high revenues from tobacco, coal, oil, or gas, as well as electricity producers with very high emissions, no longer have a place in our Luxembourg funds.
Our three funds now fully comply with ESMA's requirements for fund names with sustainability references.
What does this mean for investors?
For investors in our Luxembourg funds, the implementation brings several advantages:
Greater transparency: A fund name is clearly linked to verifiable criteria.
Greater security: Sustainability is not a marketing promise, but is firmly anchored in the investment strategy.
Greater credibility: Investors can rest assured that the terms used in the fund name have substance.
Conclusion
With the implementation of ESMA requirements since spring 2025, we have created clear sustainability standards for our Luxembourg funds. This strengthens the trust of our investors, ensures greater transparency, and helps to make sustainable investments in Europe more credible and comparable.
Our position is clear: if sustainability is in the name, it should also be evident in the portfolio.
