A recent Clarity AI study suggests that 44% of funds using environmental and impact terms may need to change their names or divest assets to comply with new EU regulations. The research reveals that these funds are invested in assets breaching the Paris-aligned benchmark (PaB) exclusionary criteria, which disallows investments in sectors such as controversial weapons, tobacco, and fossil fuels. This first part of a two-part series highlights the need for asset managers to swiftly adjust their portfolios, as the new ESMA guidelines will take effect three months after their translation is published. The study also notes that 82% of the non-compliant funds are Article 8 funds. The second part of the series will further examine criteria related to violations of United Nations Global Compact (UNGC) principles and OECD Guidelines for Multinational Enterprises. Clarity AI warns that the actual percentage of funds breaching the guidelines might be even higher.
Learn more about the implications of the new EU regulations and the findings of Clarity AI’s study here.
