As the ESG investment landscape continues to evolve, clarity has become just as important as conviction. In a move designed to reduce greenwashing and enhance transparency for investors, the European Securities and Markets Authority (ESMA) is implementing new naming guidelines for ESG funds, effective from April 2025. These changes, while regulatory in nature, present a meaningful opportunity for investors and fund selectors alike.

At Nordea Asset Management (NAM), we’ve long believed that sustainable investing deserves more than just a label—it demands a process, a policy, and a purpose. That’s why we welcome these new guidelines not as a disruption, but as a validation of the standards we already uphold.

A Stronger Framework for ESG Fund Names

Under the new ESMA rules, funds using ESG-related terms in their names must now meet minimum criteria tied to one of six defined categories: Sustainability, Impact, Environmental, Transition, Social, and Governance. This structured approach helps investors quickly assess whether a fund’s name accurately reflects its underlying ESG commitments.

From a fund selection perspective, this is a long-awaited improvement. The previous regulatory framework—particularly the broad scope of Article 8 under SFDR—often left too much room for interpretation. With ESMA’s categories, selectors now have clearer filters and a more level playing field.

From Compliance to Clarity: NAM’s Proactive Approach

While many asset managers are removing ESG-related terms from their fund names to avoid the new compliance thresholds, NAM is taking a different path: adding them. Our internal investment policies already align closely with the Paris-Aligned Benchmark (PAB) exclusions, and many of our strategies exceed the 50% sustainable investment threshold outlined in the ESMA guidelines. These changes allow us to communicate that more transparently—helping clients easily identify which NAM funds meet these elevated criteria.

Importantly, this is not a change in investment process, but a clarification. The goal is to make it easier for investors and fund selectors to understand where our funds stand, without having to dig into templates or documentation.

Real Impact for Fund Selectors

The enhanced transparency helps streamline pre-screening and due diligence. These guidelines allow selectors to filter with greater confidence. It’s no longer just about what a fund says it is—but what it can prove it is.

Still, labeling isn’t a shortcut to trust. While ESMA offers a regulatory definition for sustainable investments, there remains some variation in how asset managers apply it—particularly based on data providers or methodology. That means ongoing analysis and due diligence remain critical in the fund selection process.

Selectors are now evaluating not just how funds align with ESMA’s thresholds, but how consistently they have upheld those standards over time. Greater weight is being given to strategies that have demonstrated continuity and rigor, even prior to the rule change.

Bringing Clarity to Action: Fund Name Changes at a Glance

In response to ESMA’s updated naming guidelines, Nordea Asset Management has proactively updated the names of many of its funds to more clearly reflect their sustainable investment profiles. Rather than removing ESG-related terms to avoid scrutiny, NAM has embraced the opportunity to better communicate each fund’s sustainability alignment. The tables below outline the key changes across both Nordea 1 and Nordea 2 fund ranges. While the fund names have evolved, the strategy and ESG process remain unchanged—reaffirming continuity and alignment with ESMA’s standards.

Sustainable Solutions Across Asset Classes

Importantly, these developments aren’t confined to equities. NAM’s sustainable fixed income offerings are also gaining traction. With the rise of green and covered bonds, sustainable portfolios no longer need to compromise on risk profiles. This enables the construction of balanced portfolios that offer sustainability without demanding a higher risk tolerance from clients.

Looking Ahead

The ESMA naming guidelines represent more than a regulatory shift—they mark a milestone in ESG maturity. Investors are better equipped to make informed decisions, and fund selectors have more consistent tools to evaluate product quality and integrity.

At Nordea Asset Management, this is simply the next chapter in a long-standing story. We’ve always believed that transparency, accountability, and trust are at the heart of sustainable investing. Now, we’re proud to wear that commitment more clearly in the names of our funds.