How big finance greenwashes climate crisis culprits

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As of October 2022, the Airbus A320-200 was the world’s second most popular aircraft. It accounts for  11.6 percent of aviation carbon emissions, second only to the top-seller Boeing 737-800. So how is it that producing the Airbus aeroplanes which are flying you from Paris to Helsinki, or from Dublin to Izmir, is marketed as a “green” business to investors?

The contradiction stems from flawed legal safeguards put in place by the European Union (EU) in a loophole that allows so-called ‘green funds’ to invest in activities causing climate damage, while officially vouching for the public good.

These funds are mostly managed by banks alongside pension funds and insurance companies. They are commonly referred to as “ESG” financial products, since they aim to address environmental, social and governance issues, in addition to ensuring profits for investors.

However, the managers of these funds, which are marketed as environmentally (or socially) responsible, invest in the world’s largest carbon or greenhouse gas (GHG) emitting companies in an attempt to capitalise on the success of green financial markets in Europe. As a result, they are driving investor money into “greenwashing”: the “act or practice of making a product, policy, activity, etc. appear to be more environmentally friendly or less environmentally damaging than it really is”.

The top 10 “green” finance operators, by investment value, are Deutsche Bank Asset & Wealth Management (DWS), Black Rock Investment Management and Advisors Divisions, Credit Agricole Amundi Asset Management, Intesa Sanpaolo Eurizon Capital, Fidelity International, JP Morgan Asset Management, Northern Trust, Templeton, Allianz and Storebrand Kapitalforvaltning.

These financial institutions are members of the lobby group European Fund and Asset Management Association, which declined our request for comment.

Research from the last quarter of 2023, using data from the London Stock Exchange Group (LSEG), points to a system of weak regulation being exploited for profit, making it nearly impossible to limit global warming.

Climate disruption as investor profit

We found that the top 10 asset managers (named above) are responsible for more than a quarter of all investments by EU-regulated “green funds” – this is €87 billion – in the 25 biggest GHG emitters in each of the eight most carbon-intensive economic sectors – 200 companies in total (1). These sectors include fossil fuel extraction and refining (oil, gas and coal), agribusiness (deforestation, crop plantations, pasture, fertilisers, manure), transportation (road, aviation or shipping), steel production and fashion (2), and account for 60-70% of global carbon emissions, according to the International Panel on Climate Change (IPCC) and other sources (3).