Make sure sustainable fund names are in line with requirements

The exploration consisted of an analysis of documentation of approximately 50 funds and an in-depth investigation of five managers into the assurance of ongoing compliance with the FNG.

Exclusions must be complete and clear

For funds that use sustainability terms in their name, certain investments are excluded based on the FNG. These exclusions must be clearly and fully included in the fund documentation. In practice, this is not yet always the case: exclusions are frequently incomplete or insufficiently clearly stated in the prospectus or pre-contractual information. Therefore, it is important that managers update their documentation and make the FNG exclusions directly accessible to investors. If information is only contained in supporting documents, it complicates the determination of the sustainability approach — precisely what the FNG aims to prevent.

Ensure that monitoring of requirements is appropriate

The FNG describes the requirements that funds with sustainability terms in their names must meet. To meet these requirements, fund managers need to have an appropriate system in place to ensure continuous compliance with these requirements. Many parties build upon existing controls, but these do not always fully align with the FNG. It is therefore important to assess whether monitoring processes still fit the requirements: are responsibilities clear, is the data used suitable, and does the process flag breach in a timely manner? By strengthening this, managers can continuously monitor and substantiate sustainability requirements.

Act in event of breaches in the interest of the investor

Situations may arise in which investments in the portfolio are no longer in line with the FNG requirements; in such a situation, a manager must take action. Although most parties have policies in place for this, the implementation could sometimes be stricter. By clearly defining in advance how deviations are assessed, how this is communicated, and how to proceed, managers can respond more quickly and consistently. This helps protect investor interests and reduces reputational risks — precisely what the FNGs are aimed at.
Careful and complete application of the FNGs strengthens investor confidence and contributes to transparent, reliable sustainable funds. By adjusting and updating documentation, monitoring, and policies, managers avoid remedial work and demonstrate that sustainability claims are serious and verifiable. This principle remains unchanged even if substantive requirements are adjusted in the future considering the upcoming SFDR review.