The AMF amends its ESG Doctrine in light of the ESMA Guidelines on funds’ naming

On 2 January  2025, the French financial markets regulator (the AMF) amended its Position-Recommendation DOC-2020-03 (the “AMF ESG Doctrine”) in order to reflect the implementation of the ESMA's Guidelines on fund names using ESG or sustainability-related terms (the “ESMA Guidelines”). 

These modifications also aim at clarifying the interactions between the rules on fund names under the ESMA Guidelines and the requirements under the AMF ESG Doctrine. 

1. What happened in France since the ESMA Guidelines?

The AMF actually confirmed their compliance with the ESMA Guidelines on 16 December 2024, welcoming further clarifications by the ESMA in their ESMA Q&As on 13 December 2024. 

As a reminder, those clarifications (as sought by the AMF) were as follows: 

1. Treatment of Green Bonds: funds can apply exclusion requirements not at the issuer level but at the project level; 
2. Definition of controversial weapons: this specifically includes anti-personnel mines, cluster munitions, chemical weapons, and biological weapons (which are therefore part of mandatory exclusions); 
3. Commitment to invest “meaningfully” in sustainable investments as per SFDR (“SI”): threshold set at 50%.

2. Which resulting amendments did the AMF introduce in their ESG Doctrine?

• Distinct Scopes of Application

The AMF stressed out that, while the ESMA Guidelines cover funds targeting at professional clients, their ESG Doctrine still applies to funds authorised for retail clients only.

As a reminder, the new fund naming requirements (under the ESMA Guidelines) apply to both French and foreign (i.e. non-French) funds, including those authorised for marketing to professional clients. The ESMA Guidelines are applicable: (i) since 21 November 2024, to any new funds created after such date; and (ii) since 21 May 2025, to currently existing funds. 

Conversely, the central or reduced communication requirements (specific to the AMF ESG Doctrine) continue to apply to French and foreign (i.e. non-French) funds authorised for marketing in France to retail clients.

• Cumulative Application

Funds wishing to use terms related to ESG criteria must comply with the ESMA Guidelines.

Mention of terms related to ESG criteria in the fund name is no longer considered “central” communication under the AMF ESG Doctrine. In other words, existing criteria for fund names have been replaced by those of the ESMA Guidelines and extended to all types of funds (notably those reserved for professional clients).

However and if these funds are also designed to be opened to retail clients in France, these funds must at the same time meet the AMF ESG Doctrine requirements for central or reduced communication in order to be able to continue communicating on ESG criteria in their regulatory and commercial documentation (i.e., beyond their naming).

• Relaxation of AMF ESG Doctrine

To ensure consistency between the ESMA Guidelines and its ESG Doctrine, the AMF decided to relax its position on the underlying ESG methodology of funds in central communication. Now, these funds can account for ESMA exclusions (such as fossil fuels, tobacco, etc.) to achieve the 20% investment universe reduction rate (for a selective approach).

Such relaxation received a positive echo from the industry and in particular from foreign funds.

• Adaptation of Warning in Commercial Documentation

As a reminder, foreign (i.e. non-French) funds marketed in France must include a specific warning in their commercial documents if they do not meet the AMF ESG Doctrine's central or reduced communication requirements.

The revised AMF ESG Doctrine now clarifies (under the revised version of position 7) that, although foreign funds not complying with the AMF requirements (on central/reduced communication) still cannot refer to non-financial aspects in their commercial documents in France (and must also include the required disclaimer), they may use “ESG” criteria in their names when in compliance with the ESMA Guidelines.

Thus, the specific disclaimer warning on denomination under the AMF ESG Doctrine has been removed.