UNMASKING GREENWASHING: A call to clean up passive funds

The report reveals that 70% of analyzed 'sustainable' passive funds from five major asset managers are exposed to fossil fuel expansion, highlighting a critical 'blindspot' in climate policies. It argues that passive investing is not a neutral process but a series of active management choices, and calls for regulators to forbid the sale of funds with misleading sustainability claims that support fossil fuel developers.

• Five major asset managers—BlackRock, Amundi, UBS AM, DWS, and Legal & General Investment Management (LGIM)—held at least US$227 billion in fossil fuel developers in 2023, with more than half of this amount originating from passive portfolios.
• Analysis of 430 'sustainable' passive funds managed by the five selected asset managers showed that 70% (304 funds) were exposed to fossil fuel expansion, including companies like ExxonMobil and Shell.
• Among the five asset managers analyzed, Amundi had the highest proportion of 'sustainable' passive funds exposed to fossil fuel expansion at 78%, followed by LGIM (73%), UBS AM (73%), BlackRock (72%), and DWS (57%).
• The methodologies used by indices making 'sustainability' claims are not standardized and are often flawed, frequently relying on 'best-in-class' ESG ratings that do not guarantee the exclusion of companies failing to meet science-based redlines for the 1.5°C trajectory.
• Passive funds provide direct financing to fossil fuel developers by purchasing large quantities of new bonds on the primary market, creating a direct link between portfolio holdings and the funding of carbon-intensive assets.
• Asset managers frequently exclude passive funds from the scope of their fossil fuel sector policies; for instance, as of 2023, only one out of 20 large asset managers with a coal sector policy applied it to more than 50% of its passive funds.
• The report debunks the claim that asset managers are powerless to exclude companies from passive funds, stating that passive investing involves active choices regarding which products to offer and the ability to engage index providers to change index compositions.
• The report calls for regulators to forbid the sale of funds with sustainability claims that invest in companies developing new fossil fuel projects and to establish a clear definition of greenwashing with associated sanctions.

APA

Cuvelier, L. (2024). UNMASKING GREENWASHING: A call to clean up passive funds. Reclaim Finance. https://reclaimfinance.org/site/wp-content/uploads/2024/03/15032024-Report-Unmasking-greenwashing-a-call-to-clean-up-passive-funds.pdf

Chicago

Cuvelier, Lara. UNMASKING GREENWASHING: A call to clean up passive funds. Reclaim Finance, 2024. https://reclaimfinance.org/site/wp-content/uploads/2024/03/15032024-Report-Unmasking-greenwashing-a-call-to-clean-up-passive-funds.pdf.

Wikipedia

{{cite report |last1=Cuvelier |first1=Lara |title=UNMASKING GREENWASHING: A call to clean up passive funds |publisher=Reclaim Finance |date=March 2024 |url=https://reclaimfinance.org/site/wp-content/uploads/2024/03/15032024-Report-Unmasking-greenwashing-a-call-to-clean-up-passive-funds.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cuvelier2024unmasking, author = {Cuvelier, Lara}, title = {{UNMASKING GREENWASHING: A call to clean up passive funds}}, institution = {Reclaim Finance}, year = {2024}, month = mar, url = {https://reclaimfinance.org/site/wp-content/uploads/2024/03/15032024-Report-Unmasking-greenwashing-a-call-to-clean-up-passive-funds.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }