Schroders renames Energy Transition Fund before ESMA deadline approaches
The European Securities and Markets Authority (ESMA) has introduced new guidelines on the labelling of sustainable and ESG funds, effective from May 2025. These guidelines aim to establish minimum standards for the use of ESG or sustainability-related terms, reinforcing transparency, data quality, and compliance.
Under the new guidelines, funds are required to dedicate at least 80% of their portfolio to assets that meet the criteria for transition assets. This means that funds, such as the Schroders Global Alternative Energy Fund, have until May to comply with the new rules.
In response to these new guidelines, UK manager Schroders is rebranding its £167m Global Energy Transition Fund to Schroder Global Alternative Energy Fund on February 26. The fund, managed by Alex Monk, Felix Odey, and Mark Lacey, focuses on investments in industrials, utilities, and information technology.
The rebranding is to comply with EU regulations on sustainable fund labelling. While explicit details on Schroder’s rebranding are not included in the search results, it is clear that funds like Schroder’s, which position themselves in the alternative energy and sustainable investment space, may need to adjust their fund names to align with the new EU minimum standards for ESG-related terms.
Furthermore, these funds may need to update disclosures to match the enhanced ESG reporting requirements, including transparent GHG targets and Principal Adverse Impact (PAI) indicators. They may also need to shift the fund’s classification to fit into new EU labels such as “transition” or “impact” fund categories under the upcoming framework.
The Schroders Global Alternative Energy Fund, available in GBP, USD, EUR, CHF, and SGD share classes, has been emphasizing investing in solution assets rather than transition stocks. However, the fund has been affected by growing investor scepticism, with a drop of more than 36% since 2022, despite still outperforming its benchmark, the MSCI Global Alternative Energy Index, which is down 53.2% since 2022.
The new EU guidelines require Schroder Global Alternative Energy Fund to transparently disclose sustainability metrics, possibly rename or reclassify the fund under revised labelling criteria, and align its ESG data systems and reporting processes with EU standards effective in 2025 and beyond. Fund houses that fail to meet these guidelines could face fines and reputational damage.
These changes are part of an ongoing regulatory overhaul aimed at enhancing transparency and accountability in the sustainable finance sector. Fund managers must prepare for this by reviewing their fund positioning, adapting ESG data systems for evolving definitions, and aligning with a converging set of regulations including SFDR, the Corporate Sustainability Reporting Directive (CSRD), and the EU Taxonomy.
- The Schroders Global Alternative Energy Fund, as a player in the sustainable and alternative energy investment space, may need to adjust its fund name to align with the new EU minimum standards for ESG-related terms, such as renaming or reclassifying it under revised labelling criteria.
- In the context of the new EU guidelines, Schroder's Global Alternative Energy Fund may need to update disclosures to ensure transparency in sustainability metrics, shift its fund's classification to fit into new EU labels like "transition" or "impact" fund categories, and align its ESG data systems and reporting processes with EU standards in order to maintain compliance.
