In financing of the sustainable transformation, the fund industry plays a key role as a significant capital-raising source. However, the lack of standards for investments that can be considered sustainable in terms of EU regulation leads to uncertainty in the market. The EU is working on several projects for this purpose. These include considerations for a classification system for sustainable products and the standardisation of sustainability reporting obligations. New ESMA guidelines provide more clarity for fund names with sustainability references.


The EU is aiming for a climate neutral economy by 2050 and wants to support sustainable economic sectors and production processes by directing capital flows into corresponding activities. The fund industry, as a significant capital-raising source is happy to play a key role in this endeavour. Asset managers have a longstanding track record of financing sustainable projects and companies. As early as 2012, the BVI introduced its 'Guidelines for Responsible Investment'.

Although EU legislators have adopted a flood of detailed regulations, they have not yet established any valid definitions of what consitutes a sustainable product. The EU taxonomy and the Sustainable Finance Disclosure Regulation (SFDR) currently only govern transparency obligations. Therefore, the BVI supports the EU Commission's considerations to introduce a classification system for sustainable products. Among other things, a product category for sustainable transformation is being discussed. This would enable investors to distinguish between funds that invest in green assets and those that support the transition from brown to green business models. Additionally, this could help curb discussions about greenwashing.

Im May 2024, the EU authority ESMA published guidelines for fund names using ESG or sustainability-related terms to combat greenwashing. The guidelines aim to prevent misleading fund names. ESMA has set a minimum threshold of 80 per cent of investments that are intended to achieve environmental, social or sustainable characteristics or investment objectives for the use of sustainability-related terms such as ‘ESG’, ‘sustainable’ and ‘impact’. The guidelines also contain standardised exclusion criteria for various terms contained in fund names.

Another important step towards clearer criteria and increasing the quality of sustainable investment products is the regulation of ESG rating providers. In April 2024, the EU Parliament adopted the ESG Rating Regulation. According to this regulation, ESG rating providers will be subject to central authorisation and supervision by ESMA in the future. A key point of negotiation was the handling of internal ESG ratings created by fund companies for the purposes of their own products and services. The compromise now includes additional disclosure obligations regarding the methods of such internal ESG ratings if they are communicated to third parties as part of advertising.

Since August 2022, investment advisors have to ask their clients about their sustainability preferences and offer suitable products. For this purpose, certain product features are mandatory for funds with sustainability features (according to Articles 8 and 9 of the SFDR). However, the lack of details and standards hinders the advice. Therefore, the BVI and the German Banking Industry and the Derivatives Association (BSW) have developed a joint target market concept for sustainable financial products. The concept provides a reliable minimum standard for the German market which is by date unique in Europe.

Nevertheless, there is much room for interpretation remaining, due to the lack of regulatory guidelines. Among others, determining the minimum share of sustainable investments at fund level proves to be difficult, as there are no binding and consistent calculation methods. This may result in products pursuing a similar investment strategy whilst reporting significantly different shares of sustainable investments. This complicates understanding for both advisors and investors to understand and makes investment advice on sustainability very complex. Clear standards and the introduction of product categories for sustainability could help alleviate these issues in the future.

At the end of March 2024, fund companies in Germany managed a total of EUR 977 billion in retail funds and Spezialfonds with sustainability features. Retail funds accounted for around three quarters.





Questionnaire by the High Level Expert Group on sustainable finance interim report




BVI’s response to the Commisson’s Public consultation on long-term and sustainable investment


BVI's positions from A-Z

Member area

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