Photo credit: Getty Images
A recent report revealed that a European Union regulatory fund designated for sustainability purposes has invested $18 billion in the world’s 200 biggest polluters.
what’s happening?
The investigation, led by news outlet Voxeurop with support from The Guardian and other media, analysed investments in the 25 biggest polluters across the eight industries most responsible for carbon pollution.
Data for the fourth quarter of 2023 revealed that around 20% of the $87 billion classified under the environmental and social section of the EU’s Sustainable Finance Directive came “from funds promoting themselves using green terms.”
Most of the $18 billion in investments in 200 companies, including fast fashion brands, fossil fuel companies and SUV makers, came under Chapter 8 jurisdiction, which focuses on environmental and social issues. The remaining $2 billion came from funds classified as Chapter 9, which focuses on sustainability.
“Europe’s largest green portfolios are just the same polluting companies repackaged as sustainable,” Xavier Sol, director of sustainable finance at the Department for Transport and Environment, told the Guardian.
The study also found that $11.7 billion of the money allocated to the biggest polluters came from funds labeled “ESG” (environmental, social and governance), while $1.1 billion came from funds with names containing keywords such as “clean,” “transition,” “net zero” and “Paris” – the last two in reference to the Paris Agreement.
Moreover, the investigation found that just 10 asset managers accounted for 25% of investments in large polluters. Several of the firms, including Amundi, Intesa Sanpaolo and Fidelity, denied any wrongdoing and insisted their investments did not undermine environmental efforts.
Why is investing important?
According to The Guardian, “the classification is often used to demonstrate the environmental friendliness of financial products,” but some companies are using the loose guidelines to make themselves appear more environmentally friendly, a practice also known as greenwashing.
This manipulation tactic is frequently used by polluting energy companies and large corporations, allowing them to make financial gain while masquerading as environmentally conscious.
“From the start, ‘Article 8’ or ‘Article 9’ product status has been used in marketing materials as a sustainability ‘quality label’, resulting in the risks of greenwashing and mis-selling,” the European banking and insurance watchdog said.
“Pension savers and the general public are misled when it comes to sustainable finance,” Lara Cuvelier, sustainable investment campaigner at Reclaim Finance, said of the VoxEurope and Guardian report.
What is being done about greenwashing?
Activists are calling for institutional reforms to curb greenwashing, including stricter labelling policies to avoid consumer confusion.
Last month, the European Securities and Markets Authority implemented revised guidelines (PDF) that block fossil fuel companies from advertising themselves as environmentally friendly, although the restrictions don’t come into effect until later this year, are not legally binding, and do not need to be adopted by governments.
““We now know that it’s not enough,” Cuvelier said of the regulations.
Thankfully, recent efforts, such as the landmark lawsuit against Dutch airline KLM and lawsuits against major oil companies, are beginning to hold parties responsible for the overheating of the planet and offer hope for a cleaner, cooler future.
Sign up for our free newsletter Cool News and Practical Information It’s easy Please eat it. While helping the planet.
