Due to industry backlash, the European Securities and Markets Authority (ESMA) is reconsidering its ESG fund naming rules, set to take effect on November 21.

These rules aim to combat greenwashing by prohibiting 'green' funds from investing in high-emitting sectors like oil and gas.

Critics argue this could hinder financing for polluting companies striving to decarbonise and raise costs for energy transition projects.

ESMA remains committed to providing clear sustainable fund guidelines but is reviewing guidance on green bonds, which are vital for financing renewable energy.

Excluding energy firms from sustainable labels may slow decarbonisation efforts and delay carbon neutrality goals, as the European Fund and Asset Management Association (EFAMA) also argues.