A quarter of Article 8/9 funds still at risk of greenwashing
Roughly 25% of Article 8 funds and 30% of Article 9 funds were deemed to be at risk of greenwashing, according to Mainstreet Partners’ recent ESG & Sustainability Barometer.
The barometer examines the ESG and sustainability characteristics of 1,600 funds, rating the asset manager, the investment strategy and the overall portfolio of each fund.
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The study scores funds out of five, with a quarter of Article 8 funds scoring below 3 and 30% of Article 9 strategies scoring below 4.0. However, just 5% of Article 9 funds score less than 3.5.
Sophie Meatyard (pictured), head of fund reports at MainStreet Partners, said: “While greenwashing risk is stabilising, a meaningful proportion of funds still fall short of the standards investors may reasonably expect.”
The report also found asset managers’ scores across all SFDR classifications have fallen, but this was attributed to rising expectations.
Meatyard added: “Expectations for a calmer regulatory environment in 2025 did not materialise. Instead, ESMA Naming Guidelines, the UK’s SDR regime, and the announcement of SFDR 2.0 collectively sharpened scrutiny and raised the bar for transparency across the market.”
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Mirova and Robeco topped the chart for fund sustainability, with an average fund rating of 4.6.
European, global small and mid-cap strategies delivered the best sustainability score, with an average rating of 4.7 out of 5 for Article 9 strategies.
“As many pure-play sustainable solutions and impact-oriented names within global equity funds tend to sit at the lower end of the market-cap spectrum, funds positioning themselves as impact or solutions-focused are typically concentrated in these areas,” the report noted.
By contrast, the global emerging markets sector had the lowest score on Article 9 funds, averaging 4 out of 5.
Generally, the market of sustainable-focused funds is still dominated by environmental funds, with €75bn in assets under management (AUM) across a universe of 110 funds. By contrast, social funds had €17bn in AUM across 38 strategies.
The report also highlighted the growth of ESG funds in private markets, with 86% of general partners having clients advocating for the adoption of sustainable practices.
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“As private markets become embedded within long-term savings products, the need for robust, evidence-based ESG analysis is essential,” Meatyard said.
As a result, Mainstreet has updated its ESG model for private assets this year to be more similar to liquid funds, enabling clients to compare performance across different asset classes more easily.
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