Since May 2025, the European Securities and Markets Authority (ESMA) has set minimum criteria for funds that use ESG-related terms in their names [1]. Yet some asset managers are finding ways to exploit loopholes in the rules and retain names with a sustainable connotation while investing in fossil fuel developers. Reclaim Finance identifies several emblematic cases of this well-worn practice and calls on the European Commission to require the exclusion of companies developing new fossil fuel projects from all ESG-labelled funds.
Adding a simple ESG-related term allows a fund to attract more capital by influencing savers’ choices [2] — an advantage asset managers are eager to seize, as shown by several Reclaim Finance analyses exposing the continued exposure of “green” funds to companies developing new fossil fuel projects [3]. To limit such practices, ESMA has published guidelines governing fund naming. The use of terms related to the environment, impact and sustainability in fund names now requires the exclusion of companies heavily involved in fossil fuels from their investments, while those using terms related to transition, social or governance do not.
The art of renaming not to change a thing
Reclaim Finance analyzed 190 funds domiciled in France or managed by a French asset manager that changed their names between May 2024 and May 2025, following the publication of ESMA’s guidelines [4]. Nearly half modified their names to escape certain constraints, while others exploited loopholes in the regulation. Some cases are particularly revealing.
The art of influencing not to change a thing
The ease with which some asset managers avoid the main constraints of the regulation is no accident: it stems from the influence they exercised during the drafting of the guidelines.
Financial players mobilized in large numbers to respond to ESMA’s 2022 public consultation: Amundi, BNP Paribas Asset Management, UBS, BlackRock, JP Morgan AM… Opposed to the use of Paris Aligned Benchmark (PAB) exclusions — which require divestment from fossil fuel companies — they pushed for much looser criteria, particularly for funds claiming to be “ESG” or “Transition” [7].
BlackRock:
“Investors express their sustainability needs and preferences in a variety of different ways, not all of which involve avoiding certain companies or sectors. Where those preferences do involve avoiding certain types of exposures, investors do not always seek to avoid the same ones, making a uniform set of minimum exclusion criteria across all products with an ESG- or sustainability-related term in their name problematic.”
Amundi:
“As a general comment, we believe that exclusions are not appropriate as minimum safeguards for investment funds. In addition, exclusions generally do not recognize firms that are making efforts to transition.”
With the revision of the SFDR — the EU regulation on sustainability-related fund disclosures — approaching, the same lobbying dynamics are playing out: major financial players are multiplying contributions to defend a similar position, notably calling for fossil fuel–related exclusions to be limited to a single category. This would provide companies developing new fossil fuel projects with safe havens within “ESG”, “responsible”, “transition” or “impact” funds. If the European Commission adopts these proposals, the loopholes already identified in ESMA’s guidelines would be replicated in the SFDR and facilitate greenwashing.
To safeguard the credibility of European sustainable finance, a clear red line must be drawn: no fund claiming to be ESG or transition should be allowed to invest in companies involved in developing new fossil fuel projects [8]. Without this, sustainable finance will remain an empty slogan.
