Hottest Fund Class Hit by Greenwash Allegations: ESG Regulation

The most sought-after ESG fund class in Europe has just been subjected to its first thorough academic examination — and the results aren’t great.

The market for Article 9 funds, the highest ESG designation possible under European Union investing rules, contains assets that by most definitions are far from sustainable, according to a paper by Professor Marc Chesney of the University of Zurich and his colleague, Adrien-Paul Lambillon, titled “
How Green is ‘Dark Green’? An Analysis of SFDR Article 9 Funds
. They conclude that the current rules ultimately create “greenwashing risks.”

Their research shows that fund managers are ...