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New benchmarks put an end to "anything goes" for ESG indexes

ESG asset managers are accelerating their use of new climate-investing benchmarks created by European authorities, in a development that's set to make it harder to get away with greenwashing.

"You had so many different kinds of ESG benchmarks, it was impossible to compare," said Janicke Scheele, head of sustainable investment at DNB Asset Management. | Photo: PR / DNB Asset Management

While only about USD 1.2bn is now tied to gauges that meet European Commission requirements -- a tiny fraction of the USD 35trn of ESG assets worldwide -- inflows have more than doubled since January, according to the European Securities and Markets Authority.

That suggests investors are looking for some guardrails as they navigate a market rife with anxiety about greenwashing, which is the term that’s been given to exaggerated, false or deceptive claims about a product's fidelity to climate goals, such as those set in the landmark 2015 Paris agreement.

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