Almost 5,000 funds marketing themselves as ESG now hold stakes in companies in the fossil-fuel industry, according to a fresh study of the European market by a team of nonprofits.
The study, which is based on an analysis of more than 14,000 European funds claiming to target environmental, social and governance goals, found that well over a third of those funds had together invested more than €123 billion ($134 billion) in companies “actively pushing” projects that expand the production of oil, gas and coal, according to its authors Urgewald and Facing Finance.
The analysis is the latest to raise questions about the value of ESG labels, which have been slapped on funds exposed to everything from Russian government bonds to fossil fuels and — most recently — weapons of war. For that reason, Europe’s markets regulator, ESMA, has sought to rein in interpretations of ESG, forcing fund managers to demonstrate that their portfolios are actually aligned with what the label is supposed to represent.
“Companies that pursue fossil-fuel expansion projects in the midst of a climate crisis are jeopardizing our future,” said Julia Dubslaff, finance researcher at Urgewald. “Their presence in ESG funds violates the very concept of sustainability.”
Fossil-fuel companies most frequently found in ESG funds were TotalEnergies, Shell, Exxon Mobil, Chevron, Eni and BP, according to the study. Together, they account for ESG investments worth €23.5 billion, it said.
