European investment funds marketed as sustainable held more than $33 billion in fossil fuel company shares as of late 2024, raising concerns about greenwashing and regulatory loopholes.
Damian Carrington, Giorgio Michalopoulos and Stefano Valentino report for The Guardian.
In short:
- More than 480 European “green” funds governed by the EU’s sustainable finance disclosure regulations (SFDR) regulations collectively held $33.5 billion in fossil fuel stocks, including stakes in ExxonMobil, Shell, BP, Chevron, and TotalEnergies.
- Fund managers, including BlackRock, JP Morgan, and DWS, argue these investments enable shareholder influence over fossil companies, though climate analysts say the companies are not aligned with Paris climate agreement targets.
- Upcoming European Securities and Markets Authority guidelines — set to take effect May 21— will allow regulators to hold funds accountable for the use of sustainability-related labels, though the rules are not legally binding.
Key quote:
“It is diabolical for banks and asset managers to invest billions in major fossil fuel companies under the rubric of ‘green investing’ when we need to accelerate investments in non- and low-carbon energy, in carbon efficiency, and in carbon removal technologies.”
— Richard Heede, Climate Accountability Institute
Why this matters:
The term “green investing” carries a promise: that your money supports environmental progress. But when so-called sustainable funds funnel billions into oil giants, that promise is broken. Funds operating under vague or loosely enforced definitions of sustainability risk misleading individuals, institutions, and governments alike. While regulators have begun to react — tightening rules around fund naming and disclosure — investors may still find themselves funding fossil fuel expansion through portfolios meant to fight climate change.
Related: Trump’s policies reshape shareholder climate action as ESG proposals plunge
