Fast fashion labels, fossil fuel companies and SUV-makers are present in EU-regulated “sustainable” funds that tout their ethical credentials in their names, the Guardian and media partners can reveal, with $18bn (£14bn) of their investments going to the 200 biggest polluters.
Investors hold more than $87bn (£68bn) in funds that disclose under environmental and social sections of EU sustainable finance rules while including some of the biggest emitters of planet-heating gas, an analysis of data from the last quarter of 2023 shows. About one-fifth of the $87bn investments come from funds that also market themselves using environmentally-friendly terms.
The bulk of investments into the 200 biggest polluters came from funds classified under article 8, which promotes environmental or social goals, with a further $2bn coming from funds classified under article 9, whose main objective is sustainable investment.
The regulations were not designed for marketing purposes but the classifications are often used to showcase a financial product’s environmental credentials. This month the European Securities and Markets Authority (ESMA) and European banking and insurance watchdogs called for sweeping reforms to the system to tackle greenwashing.
“Status as ‘article 8’ or ‘article 9’ products have been used since the outset in marketing material as ‘quality labels’ for sustainability, consequently posing greenwashing and mis-selling risks,” the watchdogs said. They called instead for simpler product categories that are clearer to investors.
