Research: climate-focused funds are guilty of greenwashing

ETFs tracking climate change indices invest very little in green companies but increase allocation to those with poor environmental records, academic research finds.

Photo: Ørsted

Climate-focused ETFs routinely engage in greenwashing and starve sectors important to a green transition of capital, FT writes, referring to a research paper by French business school and think tank Edhec.

Exchange traded funds tracking so-called low carbon and Paris Aligned benchmarks for example, allocate little money to the greenest companies. Instead, they constantly increase their allocation to those firms whose environmental performance is deteriorating, the research paper titled Doing Good or Feeling Good? Detecting Greenwashing in Climate Investing claims, according to FT.

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