The value of a name – an ex-ante rethink of fund naming strategies considering the ESMA guidelines

Abstract

Purpose This study aims to evaluate ESMA guidelines as a policy solution to align fund naming strategies with actual practices. It addresses the sustainable development challenge of greenwashing, which misdirects capital away from genuine environmental and social solutions. Design/methodology/approach By analyzing 28,431 EU-domiciled funds (2019–2024) using a hand-selected list of over 1,000 sustainability-related terms, this study uses regression and interaction models to examine how naming and fund characteristics influence investor flows. Findings This study identifies a concentrated use of sustainability-related terms, varied regulatory impact across assets and countries and a clear correlation between sustainable names and increased fund flows. Substantial compliance costs are potentially offset by the branding benefits of sustainable positioning. Practical implications The findings offer asset managers a structured framework to evaluate whether and how to retain sustainability-related terms in fund names. Managers are encouraged to view the guidelines not merely as a cost factor, but as an opportunity to build long-term credibility by aligning fund names with substantive Environmental, Social, and Governance (ESG) integration. Social implications By ensuring that fund names reflect authentic sustainability practices, these standards facilitate the mobilization of private capital toward the transition to a low-carbon economy, thereby supporting long-term goals of sustainable development and increasing the societal impact of the financial industry. Originality/value To the best of the authors’ knowledge, this first large-scale empirical study quantifies ex-ante the potential financial and strategic implications of ESMA guidelines, offering actionable insights for asset managers, regulators and investors.