EU-regulated "sustainable" funds invest billions in polluting companies, including fast fashion and fossil fuel firms, misleading investors about their environmental impact.
EU-regulated sustainable funds have invested $18 billion in the 200 biggest polluters.
Funds marketed as environmentally-friendly include significant investments in high-emission sectors.
Campaigners call for stricter regulations to prevent greenwashing and misleading labels.
Key quote:
"Pension savers and the general public are being misled when it comes to sustainable finance."
— Lara Cuvelier, sustainable investment campaigner at Reclaim Finance
Why this matters:
The allure of sustainability has attracted a significant number of investors seeking to align their portfolios with their values. However, the lack of stringent criteria and transparency within the EU's regulatory framework has allowed companies with questionable environmental practices to slip through the cracks. Fast fashion, notorious for its massive carbon footprint and waste generation, and fossil fuel firms, the main contributors to climate change, are among the top beneficiaries of these "sustainable" funds.
A proposal before the Securities and Exchange Commission would allow the New York Stock Exchange to list companies with missions to improve ecosystems.
The country’s largest financial firms are bracing for a fresh wave of attacks on their sustainable investing efforts after the midterm elections — especially if Republicans take control of one or both houses of Congress.
