Executive Summary

SIFMA AMG is supportive of ESMA’s efforts to increase clarity for investors and reduce the risk of “greenwashing.” However, SIFMA AMG has some concerns in relation to ESMA’s proposals, in particular:

• The imposition of quantitative thresholds is inappropriate as they will result in arbitrary outcomes and rely on terms which are not precisely defined.

• A better alternative to quantitative thresholds would be an approach which focuses on the intentionality of the investment fund.

• An additional threshold for the use of the word “sustainable” is not necessary as it may confuse retail investors who may not appreciate the distinction between this and other ESG words.

• The use of safeguards based on Article 12(1)-(2) of Commission Delegated Regulation (EU) 2020/1818 is inappropriate as there are sufficient safeguards built into Article 8 and Article 9 and the DNSH test for sustainable investments, and, in any case, the safeguards proposed are not appropriate for many types of ESG funds.

• There is no added value in adopting specific requirements for funds with transition-related terms in their names given the lack of confirmed definitions of terms such as on “transition” and “transitioner.”