‘It’s scandalous’: Funds rebrand but keep €13.7 billion in fossil fuel investments

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🗞️ Driving the news: A new report reveals that over one in five European investment funds that previously used terms like "ESG" or "sustainable" in their names have removed those labels in the past year, following the EU’s anti-greenwashing regulations
• Despite this rebranding, many funds continue to hold substantial investments in fossil fuels, with €13.7 billion still allocated to such assets

🔭 The context: In March 2024, the European Securities and Markets Authority (ESMA) introduced stricter guidelines to combat greenwashing and ensure that funds are transparent about their environmental, social, and governance (ESG) claims
• The guidelines aim to tackle the growing concern that funds marketed as ESG-focused may not genuinely adhere to sustainability criteria, misleading investors and undermining confidence in the market

🌍 Why it matters for the planet: The discrepancy between rebranding efforts and continued fossil fuel investments raises serious concerns about the integrity of ESG investing
• The funds’ actions could hinder meaningful progress towards sustainable finance, which is critical to meeting climate goals
• Transparency and accountability in the financial sector are essential to ensuring that capital is directed towards genuinely sustainable solutions rather than perpetuating reliance on fossil fuels

⏭️ What's next: Regulators are expected to further scrutinise the rebranding of funds, potentially enforcing stricter penalties for greenwashing
• Investors may also seek greater clarity on how funds align with the EU’s sustainability standards, pushing for better reporting and stricter enforcement of ESG criteria
• This could drive a deeper shift towards truly sustainable investing across Europe’s financial markets

💬 One quote: "It’s scandalous that funds are rebranding with ESG labels while continuing to hold such substantial fossil fuel investments." — European financial market expert

📈 One stat: Over €13.7 billion is still invested in fossil fuel assets by funds that recently rebranded to remove ESG terms from their names

See on illuminem's Data Hub™ the sustainability performance of leading European investment funds like BlackRock, and Amundi

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