Region

Jurisdiction

Regulator

2026-03-10

Align Sustainable Fund Names with Requirements

The Dutch Authority for the Financial Markets (AFM) requires fund managers to fully align their documentation, internal monitoring systems, and deviation-handling protocols with the European Guidelines on Sustainability-Related Fund Names (FNG). The regulator mandates that all investment exclusions be explicitly and completely disclosed in precontractual documents, that monitoring frameworks continuously verify ongoing compliance, and that portfolio deviations be addressed promptly to safeguard investor interests. Implementing these measures will prevent reputational risks, ensure verifiable sustainability claims, and maintain market transparency ahead of the upcoming SFDR review.

Netherlands

Autoriteit Financiele Markten

News

11/03/26

A recent assessment by the Dutch Authority for the Financial Markets (AFM) shows that funds with sustainability-related names do not always fully comply with the European Guidelines on Sustainability-Related Fund Names (FNG). This creates a risk that investors do not get a clear picture of a fund's sustainable character. Fund managers are therefore urged to immediately test their documentation and internal monitoring against the FNG and implement necessary adjustments as soon as possible.

In Short

• Exclusions must be complete and clear • Ensure monitoring of requirements is appropriate • Act on deviations in the investor's interest

The assessment consisted of an analysis of documentation for approximately 50 funds and an in-depth investigation with five fund managers regarding the safeguarding of ongoing compliance with the FNG.

Exclusions must be complete and clear For funds using sustainability terms in their names, certain investments are excluded on the basis of the FNG. These exclusions must be clearly and completely included in the fund documentation. In practice, this is not always the case: exclusions are frequently incomplete or insufficiently clear in the prospectus or precontractual information. Therefore, it is important that fund managers update their documentation and make the FNG exclusions directly accessible to investors. If information is only available in underlying documents, this complicates the determination of the sustainability approach — precisely what the FNG aim to prevent.

Ensure monitoring of requirements is appropriate The FNG specify which requirements funds with sustainability terms in their names must meet. This also entails the obligation to have an appropriate system to ensure ongoing compliance with these requirements. Many parties build on existing controls, but these do not always fully align with the FNG. It is therefore important to assess whether monitoring processes still match the requirements: are responsibilities clear, is the data used suitable, and does the process detect deviations in a timely manner? By strengthening this, fund managers can continuously monitor and substantiate sustainability requirements.

Act on deviations in the investor's interest Situations may arise where investments in the portfolio no longer align with the FNG requirements; in such a situation, a fund manager must take action. Although most parties have policies for this, the implementation can sometimes be sharper. By clearly establishing in advance how deviations are assessed, how this is communicated, and how to act, fund managers can respond faster and more consistently. This helps protect investors' interests and reduces reputational risks — precisely what the FNG are targeting.

Careful and complete application of the FNG strengthens investor confidence and contributes to transparent, reliable sustainable funds. By adjusting and updating documentation, monitoring, and policies, fund managers prevent remedial work and demonstrate that sustainability claims are serious and verifiable. This principle remains fully applicable even if substantive requirements are adjusted in the future in light of the upcoming SFDR review.

Align Sustainable Fund Names with Requirements

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