Unmasking greenwashing: A call to clean up passive funds
The number of passively managed funds is increasing year after year. And these funds are not immune to accusations of greenwashing – quite the contrary. Passive funds with “sustainability” claims actually invest in fossil fuel developers, partly because these funds are becoming a blindspot in asset managers’ climate policies.
Key findings:
- 70% of the “sustainable” passive funds analyzed are exposed to companies developing new coal, oil or gas projects.
- The benchmark indexes used by the funds have methodologies that are not based on scientific criteria for greenhouse gas emissions.
While some asset managers have adopted policies to restrict their investments in fossil fuels (most often in coal), few apply these policies to their passive investments. When they do exist, these highly inadequate policies do not prevent so-called sustainable funds from being exposed to fossil developers. Reclaim Finance therefore calls on regulators to take action against greenwashing, notably by introducing mandatory, standardized minimum criteria for funds marketed as “sustainable”.