UPDATE: Changes to the AMF ESG Doctrine to reflect compliance with the ESMA Guidelines on Funds’ Names Using ESG or Sustainability-Related Terms

In our OnPoints dated 20 May and 7 August 2020, we explained the requirements that the French regulator (Autorité des Marchés Financiers (“AMF”)) has imposed on asset managers through the publication of Position-Recommandation AMF 2020-03¹ (the “AMF ESG Doctrine”). The aim of the AMF ESG Doctrine is to ensure that the information asset managers provide to retail investors in relation to non-financial information (and in particular information relating to sustainable investing) is proportionate to the importance these factors have in the investment process.

In this update, we report on recent changes the AMF has made to the AMF ESG Doctrine, published on 30 December 2024 (available here), following its decision to comply with the ESMA² Guidelines on funds’ names using ESG or sustainability-related terms, published on 14 May 2024 (the “Guidelines”) (translations in all official EU languages of its Guidelines published on 21 August 2024 and available here).

Introduction

As a reminder, the purpose of the Guidelines is to ensure that investors are protected against unsubstantiated or exaggerated sustainability claims in fund names, and to provide asset managers with clear and measurable criteria to assess their ability to use ESG or sustainability-related terms in fund names. The Guidelines, which apply to UCITS management companies and alternative investment fund managers, introduce minimum requirements related to quantitative thresholds (80% of investments meeting ESG criteria), exclusion criteria (following Paris-aligned Benchmark and Climate Transition Benchmarks exclusions), and additional qualitative criteria for certain ESG or sustainability-related terms if used in fund’s names.

The Guidelines have already been covered in the OnPoints published by our EU Sustainability Taskforce: “ESMA Publishes Guidelines on Funds’ Names Using ESG or Sustainability-Related Terms”, “The Implementation Period for ESMA’s Guidelines on Funds’ Names Has Commenced” and “ESMA Publishes Q&A on its Guidelines on Funds’ Names Using ESG or Sustainability-related Terms” and will not be further discussed here.³

The Guidelines:

- apply from (i) 21 November 2024 for new funds (the “Application Date”) and (ii) 21 May 2025 for funds in existence on or before the Application Date; and

- application is dependent on the approach taken by each national competent authority, which was obliged to notify ESMA whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the Guidelines.

Historically, the AMF has taken a close interest in the regulation of sustainable finance and the prevention of “greenwashing”⁴ with the ultimate aim of protecting French investors, in particular retail investors. The AMF has provided doctrines and guidance specifically related to sustainable finance (such as the AMF ESG Doctrine and various other initiatives, setting out how, in its view, the requirements of the AMF ESG Doctrine and SFDR⁵ interact (see our OnPoints “AMF ESG Doctrine: Goldplating SFDR by another name?” and “SFDR update alert: AMF proposes revisions to SFDR”)).

The AMF has notified ESMA that it will comply with the Guidelines and, as a consequence certain modifications to the AMF ESG Doctrine were necessary.

Key Takeaways

On 30 December 2024, the AMF published an update to the AMF ESG Doctrine to reflect the application of the Guidelines and avoid asset managers having to attempt to comply with conflicting rules. Prior to the December 2024 update, the AMF ESG Doctrine included criteria relating to the regulation of “fund names”. These provisions have been replaced by those set out in the Guidelines and extended to all collective investment undertakings, including alternative investment fund (“AIFs”) reserved to professional clients, which are subject to the Guidelines.

A distinction should however be made between:

(i) managers of French AIFs and managers of French and non-French ELTIFs⁶ authorized for marketing to French professional investors, who are not subject to the AMF ESG Doctrine but who are subject to the Guidelines; and

(ii) managers of French and non-French UCITS and ELTIFs authorized for marketing to French retail investors as well as certain French AIFs authorized for marketing to French retail investors which are in the scope of both the Guidelines and the AMF ESG Doctrine (“In-Scope Retail Funds”).

The amended AMF ESG Doctrine confirms that its provisions do not apply to marketing materials of In-Scope Retail Funds that are made available outside of France.

Other changes have been made to the AMF ESG Doctrine to clarify the interaction with the Guidelines.

For example:

• In-Scope Retail Fund managers must continue to ensure that their marketing materials comply with the existing criteria of the AMF ESG Doctrine when they communicate information relating to non-financial criteria. If an In-Scope Retail Fund manager wishes to (i) include terms covered by the Guidelines in the fund’s name, and (ii) include other non-financial criteria in its marketing materials, it will have to comply with both the Guidelines and the AMF ESG Doctrine;

• as originally drafted, Position No 2 of the AMF ESG Doctrine required asset managers wishing to communicate at length in marketing materials and KIDs (defined by the AMF as a “central communication”) about non-financial criteria to ensure that a significant proportion of the fund’s investments were focused on non-financial elements (such as sustainable investments).⁷ Asset managers wishing to communicate at length on non-financial criteria (i.e., in a “central manner” according to the AMF) are now permitted⁸ to take into account companies that derive revenue from “fossil fuel” exploration, mining, extraction, distribution, refining or manufacturing as part of the non-financial portion of the fund’s investment universe where asset managers intend to apply a selective approach to the investable universe, which requires a reduction of the investment universe of securities by at least 20%; and

• the AMF ESG Doctrine requires a specific disclaimer⁹ to be included in the marketing materials of non-French funds marketed in France to retail investors where those funds comply with the Guidelines but do not meet the communication requirements set out in the AMF ESG Doctrine. See below.

Timing of Entry in Force

These amendments to the AMF ESG Doctrine have applied since 30 December 2024 (i.e., immediately on publication).

Some practical reminders specifically concerning non-French UCITS and ELTIFs authorized for marketing to French retail investors:

• managers of In-Scope Retail Funds that do not comply with the AMF ESG Doctrine must incorporate the following disclaimer provided by position No. 7 of that AMF ESG Doctrine and prominently display it at the beginning of the marketing materials that are being made available to French retail investors:

“L’attention des investisseurs est attirée sur le fait que cet [OPCVM ou ELTIF de détail] présente, au regard des attentes de l’Autorité des marchés financiers, une communication disproportionnée sur la prise en compte des extra-financiers dans sa gestion.”

Free translation of the disclaimer in English: “Investors’ attention is drawn to the fact that this [UCITS or retail ELTIF] presents, with regard to the expectations of the Autorité des marchés financiers, a disproportionate communication on the taking into account of non-financial aspects in its management.”

• UCITS or retail ELTIFs incorporated outside of France which want to include the consideration of non-financial characteristics in their marketing materials, but which do not wish to comply with the requirements of the AMF ESG Doctrine may only make short references to matters relating to sustainability to avoid the risks of investors misunderstanding of the funds actual non-financial characteristics;¹⁰
  
  
• prospectus, PRIIPs KID and marketing materials of funds established outside of France must only be drafted in English and may not be translated into French. The distributor marketing the fund in France must ensure that (i) French professional investors have agreed to receive those documents in English, and (ii) French retail investors receiving the English language materials understand English (the burden of proof is with the distributor and, in practice, is complicated to prove);
  
  
• marketing materials of funds established outside of France must clearly state that the prospectus is not available in French; and
  
  
• where a non-French asset manager of a non-French UCITS authorized for marketing in France does not have access to the ROSA platform¹¹ (because it does not manage any French fund), it is no longer required to file the AMF ESG notification form.¹² However, the non-French asset manager will still be required to submit an Excel matrix to the AMF by email that includes certain information dealing with non-financial criteria.¹³ The information to be provided to the AMF includes:
  
  
  • the name of the management company, the name of the fund or the sub-fund, its legal entity identifier and its legal form;
    
  • the communication category according to the AMF ESG Doctrine;
    
  • whether the fund takes into account the principal adverse impacts on sustainability factors in accordance with article 7 of SFDR;
    
  • the SFDR ‘classification’ of the fund or the sub-fund;
    
  • answers to the following questions:
    
    • does the product commit to a minimum level of sustainable investment?
      
    • is the product subject to article 5 or 6 of the Taxonomy Regulation?¹⁴

The above-mentioned information can be provided in English.

Conclusion

The revisions to the AMF ESG Doctrine to take into account the Guidelines provide welcome clarity to asset managers who may be caught by both, and in some instances reduce the information that needs to be provided. However, managers of In-Scope Retail Funds and non-French managers that wish to market their funds to French retail investors will need to ensure they are aware of both sets of requirements and when and how to comply with them.