Nordea Adds “Sustainable” to Fund Names Ahead of ESMA Regulation
Northern Europe-based asset manager Nordea Asset Management (NAM) announced that it has added or kept the term “sustainable” in the names of 17 funds in its Nordea 1 SICAV range ahead of the implementation of new fund naming guidelines by EU markets regulator the European Securities and Markets Authority (ESMA).
The announcement follows the release in May 2024 by ESMA of its finalized guidelines for the use of ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. and sustainability-related terms in investment fund names. ESMA launched the new rules after noting a sharp increase in the use of sustainability-related terms in fund names in Europe over the past several years, leading to an increased risk of greenwashing.
Under the new guidelines, funds using ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments., sustainability, or impact terms, or environmentalEnvironmental criteria consider how a company performs as a steward of nature. terms such as “green,” “environmentalEnvironmental criteria consider how a company performs as a steward of nature.,” or “climate,” will be required to meet investment thresholds including having at least 80% of assets in investments used to meet the sustainability characteristics of the fund, and to follow the exclusion criteria for Paris Aligned Benchmarks (PABs).
The new guidelines come into effect on May 21, 2025. A recent study found that as many as two-thirds of funds in the EU labelled with sustainable or ESG-related terms may need to sell assets or change their names to align with new the new guidelines.
Nils Bolmstrand, CEO of Nordea Asset Management, said:
“We see a lot of movement in the responsible investment space right now, with several players reconsidering their commitments to ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments..”
In its release announcing the update, however, Nordea stated that “since NAM funds already uphold a high standard of sustainability, only minimal changes were needed to comply with the directive.”
Nordea said that it currently offers 20 Nordea 1 SICAV funds that meet ESMA’s criteria as “sustainable,” including its flagship ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. STARS equity and fixed income range, which includes 13 funds, which all will include “sustainable” in their names.
Bolmstrand added:
“Our alignment with ESMA’s new guidelines underscores our ongoing dedication to delivering clear, transparent, and effective RI solutions that meet the evolving needs of our clients.”
