Naming a Private Fund: How to Navigate the SEC and European Union ESG-Related Rules

August 1, 2023

By: Edgar Langeder, Stephanie Bagot, Tom Scriven, and Zahra Smith

RPCK understands that the terms environmental, social and corporate governance are becoming increasingly important to investors, investment advisors, legislators and regulators. This article is the second of a series of articles (i) related to the evolving ESG landscape and (ii) devoted to providing practical guidance for investment professionals operating in this space.

Introduction and Background.

The name of a fund is typically the first piece of information shared with investors, as such it can significantly influence investors´ investment decisions. This is especially true for funds claiming to invest in environmental, social, or governance (“ESG”) and/or sustainable economic activities. Over the years, ESG claims and labels within the asset management industry, particularly as applied to fund names, have faced little regulation. Meanwhile, and some argue consequently, the industry has faced increasing claims of greenwashing and misleading fund names. Regulators have responded both in the United States and the European Union by imposing (or proposing) heightened rules on the use of ESG elements in fund names, with the stated objective of improving confidence, transparency and reliance on fund names and the associated ESG strategies marketed to investors.

In this article, we discuss the current regulatory regimes both in the United States and the European Union related to fund names and proposed amendments to such regimes and ESG and/or sustainable investment activities. We also discuss the potential implications of these rules for funds with cross-border operations or marketing in the United States and the European Union.

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