The introduction of new naming guidelines for ESG funds by the EU supervisory authority ESMA[1] on May 21 should finally provide more clarity for consumers. A new analysis by Finanzwende, Urgewald and Facing Finance shows that instead of making their portfolios more sustainable and dropping shares in fossil fuel companies, many providers have simply renamed their funds. A total of 674 funds, whose original name would have required the exclusion of fossil fuel investments under the new rules, were renamed by their providers.
Complete results for download here.
The new ESMA guidelines require funds with certain sustainability terms in their name to exclude fossil fuel companies and to invest at least 80% of the fund assets in accordance with the strategy stated in the name. However, 391 funds have removed the regulated term - such as "sustainable", "ESG", "climate" or "responsible" - from their names since the guidelines were published in May 2024. A further 283 have replaced it with softer terms such as "screened", "selection" or "committed", which the new rules do not address directly.
According to research by Urgewald and Facing Finance published in March 2025, 427 of the 674 renamed funds invested around 13.7 billion Euro in coal, oil and gas companies. These funds can hold on to their climate-damaging investments by changing their names.
For the new analysis, more than 15,000 EU-traded funds that claim to promote environmental or social characteristics[2] - and are therefore potentially affected by the new ESMA requirements - were examined as of May 25, 2025. A year ago, in May 2024, 4,043 funds, or 27%, still had a term in their name that would lead to the exclusion of fossil fuel companies. One year later, only 3,455 funds, or 23%, included terms such as "environment", "impact" or "sustainability".[3]
"What we are seeing here is not just rebranding. Consumers bought the funds because they wanted to invest sustainably," says Alison Schultz, an analyst at Finanzwende. "A mere name change is no substitute for real change. It betrays investors’ trust and misdirects capital that should have flown into the green transition. Renaming instead of divesting undermines the credibility of a market that depends on financial products being what they claim to be."
Julia Dubslaff, financial analyst at Urgewald, asserts: "Instead of adjusting their investment policy according to the new guidelines, many fund providers are playing creative name games. This underscores the importance of transparent regulation and tight supervision. Politics and regulatory bodies need to prevent climate-damaging investments in all ESG funds through clear rules and improved monitoring."
The most conspicuous renaming took place at US asset manager State Street. It renamed 56 percent of its funds that still had an "environmental", "impact" or "sustainability" related term in their name in May 2024. This is followed by the Swiss UBS (50 percent) and the US provider Northern Trust (49 percent).
With regard to German fund providers, Deutsche Bank subsidiary DWS is in the lead with a total of 45 funds, or 28 percent of its funds with ESMA-relevant terms. According to the latest research, these funds invested 153 million Euro in the fossil fuel sector. Allianz follows with 10 funds (28 percent), Deka with 5 funds (12 percent) and Union Investment with 10 funds (10 percent).
The results reveal the current regulation’s weaknesses. The ESMA guidelines are an important step forward but still fall short if fund providers can use semantic tricks to evade responsibility. The legislator ought to step up to the plate.
"The EU has the power to establish credible rules. The SFDR overhaul offers the opportunity to instill transparency and close loopholes. EU regulators must finally get down to business and introduce fossil fuel exclusion criteria for all ESG funds marketed in the EU," says Julia Dubslaff.
Alison Schultz adds: "If a fund calls itself ‘sustainable’ and simultaneously invests in fossil fuel expansion, this is simply misleading. Such products should have been sanctioned long ago. National supervisory authorities like Germany’s BaFin must also take consistent action here in the future."
About Finanzwende
Finanzwende is a non-partisan entity with over 14,000 members. The independent advocacy group by and for citizens was founded in 2018 to mark the tenth anniversary of Lehman Brothers’ bankruptcy. As a counterweight to the financial lobby, it pushes for more stable, fair and sustainable financial markets. Through campaigns and critical research, it pursues a common goal: a financial turnaround, such that the financial sector serves the people. https://www.finanzwende.de/ueber-uns/wer-wir-sind/
About Urgewald
When nature is destroyed, climate targets are ignored and human rights are violated, money is always involved. This is where Urgewald comes in. For over 30 years, the environmental and human rights organization has been uncovering the financial flows behind destructive projects. Urgewald combines thorough research and public campaigns to reveal and stop financial flows into harmful sectors. With our fossil databases, we provide effective tools for the financial industry to cut off the money from climate killers. https://www.urgewald.org/ueber-uns
Notes
[1] European Securities and Markets Authority.
[2] Also referred to as "Article 8/9 funds", as described in the EU SFDR Regulation’s criteria.
[3] A relevant term was removed from the name 674 times and a term was added to 86 funds. As a result, 4043 funds that have to comply with the exclusions became 3455 funds.
