Switzerland/Luxembourg – Sustainability funds hardly redirect capital to sustainable activities compared to conventional funds, according to a new study commissioned by Greenpeace Switzerland and Greenpeace Luxembourg, and published today. Exposing these misleading marketing practices, Greenpeace demands policy-makers to secure binding standards to fight greenwashing and keep sustainability funds in line with the Paris Agreement climate goals.

The study was conducted by the Swiss sustainability rating agency Inrate on behalf of Greenpeace Switzerland and Greenpeace Luxembourg, analysing 51 sustainability funds. These funds barely managed to redirect more capital toward a sustainable economy than conventional funds, not contributing to addressing the climate crisis, and misleading asset owners who want to increasingly invest their money in sustainable projects. 

While the results of the study are specific to Luxembourg and Switzerland, their relevance is far-reaching and points to a widespread set of recurring problems, as both countries play a significant role in financial markets. Luxembourg is the largest investment fund centre in Europe and the second largest in the world, while Switzerland is one of the most important financial centres in the world in terms of wealth management. 

Jennifer Morgan, Executive Director, Greenpeace International, said:

There are no minimum requirements or industry standards against which to measure the sustainability performance of a fund. Self-regulation by financial actors has proven to be ineffective, allowing banks and asset managers to greenwash in broad daylight. The finance sector must be regulated properly by lawmakers – no ifs, no buts.

The funds analysed showed no significantly lower carbon intensity than regular funds.  When comparing the Environmental, Social, and Corporate Governance (ESG) Impact score of sustainability funds with that of conventional funds, the former was only 0.04 points higher – which is a trivial difference. [1] The investment approaches analysed in the study such as ‘Best-in-Class’, climate-related theme funds or ‘exclusions’ also failed to channel more money into sustainable companies and/or projects than regular funds. 

In the case of an ESG fund, which received a low ESG Impact score of 0.39, over a third of this fund’s capital (35%) was invested in critical activities, which was more than double the average share among the conventional funds. Most of the critical activities were fossil fuels (16%, half of which were derived from coal and oil), climate-intensive transportation (6%) as well as mining and production of metal (5%).

This misleading marketing is possible because sustainability funds are not technically required to have a measurable positive impact, even if their title clearly implies a sustainable or ESG impact.

Martina Holbach, Climate and Finance Campaigner, Greenpeace Luxembourg, said:

The sustainability funds in this report fail to funnel more capital into sustainable companies or activities than conventional funds. By calling themselves ‘ESG’ or ‘green’ or ‘sustainable’, they are misleading asset owners who want their investments to have a positive effect on the environment.

Sustainable investment products must lead to lower emissions in the real economy. Greenpeace calls upon decision-makers to deploy the necessary regulation to promote true sustainability in the financial markets. This must include comprehensive requirements for so-called sustainable investment funds, and as a minimum allowing them to invest only in economic activities whose emissions reduction path is compatible with the Paris climate targets. Though the EU has recently implemented major legislative changes related to sustainable finance [2], this regulatory framework presents gaps and shortcomings which must be overcome in order to deliver the desired results.



[1] The ESG Impact score for conventional funds was 0.48 compared to sustainable funds with a score of 0.52 – on a scale from 0 to 1 (zero corresponding to a very negative net impact, one to a very positive net impact).

[2] In particular the EU Taxonomy, the Sustainability-related Disclosure in the Financial Services Sector Regulation (SFDR), amendments to the benchmarking regulations, the Non-Financial Reporting Directive (NFRD) and the Markets in Financial Instruments Directive (MiFID II).

Additional Information:

The study as well as the Greenpeace Briefings (in English, French, and German) are available here.  


Martina Holbach, Climate and Finance Campaigner, Greenpeace Luxembourg: [email protected], +352 621 233 362

Greenpeace International Press Desk: [email protected], +31 (0) 20 718 2470 (available 24 hours)

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