Clarity AI - an AI-powered sustainability platform released a new analysis showing that more than 40% of investment funds in the EU using ESG or sustainability-related labels may be required to change names or sell assets in order to meet new anti-greenwashing rules.
Under the new rules, funds using ESG, sustainability, or impact terms, or environmental terms such as “green,” “environmental,” or “climate,” will be required to meet investment thresholds including having at least 80% of assets in investments used to meet the sustainability characteristics of the fund, following the exclusion criteria for Paris Aligned Benchmarks (PABs).
Clarity AI identified 3,256 EU-domiciled funds using environmental or impact terms in their names. 44% contained investments that breached the PAB exclusion criteria, with the fossil fuels criteria as the most common problem area.
The analysis only used the top 25 most frequently used terms and only English-language terms, indicating that the real number of funds that don’t meet the new rules will be higher.
These new rules will deep-clean the greenwashing funds in the EU and give the general public more clarity when choosing an investment which gives corporations more pressure to invest in the real #ClimateFinance, which is also the main topic of the ongoing UN Bonn Conference. To #movethemoney away from fossil fuels and invest in Climate solutions collectively is our only way to achieve exponential climate actions and stop the temperature’s overshoot.
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Greenwashing is really becoming a problem. I think its because companies are realizing that consumers are shifting to climate conscience and sustainable products.. Consumer protection is inevitable hence this rules
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This is a HUGE win for transparency and Climate Action in the EU! Exposing #Greenwashing funds with AI is a game changer for #SustainableInvesting.
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This are great regulations that will put an end to false climate financial claims and put a break on investment in fossil fuels. This is a great roadmap towards achieving sustainability.
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These rules will make sure that sustainability claims are real, helping to build trust and encourage true sustainable investing.