The European Securities and Markets Authority (ESMA) published research findings recently, evaluating how its fund naming guidelines have influenced the use of ESG and sustainability-related terms to better protect investors and align investment strategies.

The study found that the guidelines have improved consistency in the use of environmental, social, and governance terms by increasing the alignment between the names of funds and their actual investment strategies.

These measures have enhanced investor protection by reducing the risks of greenwashing, according to the findings published by the EU financial market regulator and supervisor.

Improved consistency in the use of ESG terms by increasing alignment of fund names and their actual investment strategies, was one of the primary achievements identified in the report.

Drawing on nearly 1,000 shareholder notifications from the 25 largest EU asset managers, who oversee €7.5 trillion in assets under management, the research highlighted significant shifts in the industry.

“64 per cent of the funds mentioned in shareholder notifications changed their name, in most cases to avoid the use of ESG related terminology,” the mentioned noted regarding the immediate reaction to the new standards.

Furthermore, 56 per cent updated their investment policies to strengthen their sustainability focus, as managers sought to bring their portfolios into compliance with the stricter criteria.

The analysis also focused on the impact of fossil-fuel related exclusions across 4,000 EU funds that use sustainability terminology in their names, representing €2 trillion in assets.

The data indicated that funds with higher fossil fuel exposures were more likely to remove ESG terms from their names, which underscores how portfolio composition directly influences compliance choices.

Since the publication of the guidelines, funds retaining ESG terms in their names have reduced their portfolio share of fossil fuel holdings more than all other funds, suggesting active efforts to green their portfolios.

“ESMA remains committed to monitoring fund naming trends and tracking how the market evolves in response to its Guidelines, while engaging with the European Commission to support evidence-based policymaking on ESG and sustainable finance regulation,” the authority stated.

A webinar to present these findings in detail will take place on January 20, 2026, at 10.00, with registration required by 12.00 on January 19, 2026.