Financial firms dropped terms like “ESG” (Environmental, Social and Governance) and “sustainable” from the names of hundreds of their funds in the year before new European Union rules to clamp down on greenwashing came into force in late May, new analysis shows.
The rules from the European Securities and Markets Authority (ESMA) say that funds with certain sustainability or environmental-related terms in their names cannot invest in companies that get more than a certain share of their revenue from coal, oil, gas or particularly polluting electricity generation.
Those funds now also have to show that 80% of their investments meet the ESG objectives referred to in their titles.
Before the new regulation was introduced, the fund managers that dropped environmental and other sustainability terms from the highest percentage of their fund names were State Street, UBS and Northern Trust, the analysis said. It estimates that around 674 funds have done this overall.
Alison Schultz, an analyst at the German campaign group Finanzwende who conducted the research, said fund managers had earlier betrayed investors’ trust by labelling their funds wrongly and misdirecting money that should have helped to advance the green transition towards supporting business as usual.
“Consumers bought the funds because they wanted to invest sustainably,” she said, adding that “renaming [them] instead of divesting undermines the credibility of a market that depends on financial products being what they claim to be”.
Many fund managers have replaced ESG terminology in the titles of their funds with alternative words like “screened”, “selection” or “committed”, according to research by Finanzwende, Urgewald and Facing Finance and a separate analysis from Morningstar Analytics, which sells research and information to investors.
For example, Invesco changed its “Sustainable Eurozone Equity Fund” into the “Transition Eurozone Equity Fund” in March. Fund documents show that in April 2025 it had investments in Italy’s Enel and Germany’s E.ON, two utilities that sell gas and fossil-fuel electricity.
“Screened” and “transition” funds
Funds with words like “screened” or “transition” in their name can continue to invest as much as they want in oil, gas and coal businesses under the new EU regulations. Hortense Bioy, head of sustainable investing research at Morningstar, told Climate Home the use of words like this suggests fund managers “are still keen to offer products that signal ESG characteristics in the name”.
According to earlier research on the same topic released in March by Urgewald and Facing Finance, more than half of the funds that have dropped environmental-related terms from their names held shares in large fossil fuel companies – with the investments worth around €14bn ($16bn). The name changes mean that they can keep those investments.
While some have gone down this path, Morningstar analysis suggests others have done the opposite – ditching fossil fuels investments and keeping their green names. Leading global fund managers like US-based BlackRock, the world’s largest asset manager, have taken a varied approach across their portfolios.
An email BlackRock sent to clients on March 18, which it shared with Climate Home, said it had responded to the ESMA naming guidelines by changing the names of 56 funds worth $51bn to drop sustainability terms. An example it gave was dropping “ESG” from the BSF Systematic ESG World Equity Fund.
On the other hand, the email said it had kept the ESG names of another 60 funds worth $92bn, “enhancing the sustainable characteristics”.
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Morningstar found that ESG funds which did not rebrand themselves as less green were investing less in fossil fuel companies like TotalEnergies, Galp and Eni in March this year compared to May 2024.
“It is fair to assume that part of the decline can be attributed to stock divestments made to comply with the ESMA guidelines,” their analysis said.
While State Street renamed the highest percentage of these funds, other firms – like BlackRock and Amundi – have lots of sustainability-related funds that were grouped under broad EU green financial disclosure categories but never had these now-regulated terms in their names.
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Last July, Climate Home revealed that EU-based funds like Blackrock’s, which claimed to be environmentally friendly, held shares worth at least $65 million in major coal companies. Under the new rules, they can continue as long as they don’t have “environmental” or “sustainable” terms in their name.
While funds with what the ESMA calls environmental, impact or sustainability related terms cannot invest in companies with fossil fuel revenues above a certain threshold (see chart above), funds with transition-related terms still can. These words include “transition”, “improve”, “progress”, “evolution”, “transformation” and “net zero”.
BlackRock also said it had either changed the names or investment methodologies of 18 funds worth $42bn for a “clearer alignment to transition” in response to the new rules.
Investors notified
Fund managers are required to notify investors of the name changes, usually in prospectuses sent to professional investment managers.
Bioy of Morningstar said she had seen many of these notifications and, in some of them, fund managers told investors they were lowering their sustainable investment allocations. “Some of them are not as ESG as they used to be,” she said. “They’ve become almost like traditional funds.”
But she said that firms that have renamed their funds cannot necessarily be accused of greenwashing before because there were “no rules” over what terms like ESG and sustainable meant. Investors now need to be educated on what these terms legally mean according to the new rules, she added.
The rules only affect funds marketed in EU countries but, according to Bioy, that is the vast majority of the world’s funds that make green claims, even though they make up a small proportion of the total.
Asked to comment, a BlackRock spokesperson told Climate Home the investment objectives of its funds “are clearly disclosed in each fund’s prospectus and on BlackRock’s website”.
Funds “are managed in line with applicable regulations governing sustainable investing”, they said, adding that “for investors that have decarbonization investment objectives we offer a range of products that provide such exposure”.
At the time of publication, State Street, UBS, Northern Trust and Invesco had not responded to requests for comment.
The post As EU acts to stop greenwash, funds drop climate claims from their names appeared first on Climate Home News.
As EU acts to stop greenwash, funds drop climate claims from their names
Vishal Prasad is director of Pacific Islands Students Fighting Climate Change.
When the International Court of Justice (ICJ) delivered its advisory opinion on climate change last year, it marked a turning point not just for the Pacific, but for international climate law.
The court was unambiguous: states have legal obligations to protect the environment from greenhouse gas emissions, and they face accountability when they fail. For those of us who carried this campaign from a classroom in Vanuatu to Europe and New York, it was a moment of profound validation.
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But we have always said that the advisory opinion was a tool, not an endpoint. The ICJ affirmed what many in the Pacific have been saying for some time. Now we have a legal blueprint, we must carry this momentum from the courtrooms to the negotiating rooms.
Potential to shape climate politics
The advisory opinion has already begun to reshape the climate landscape. At COP30 in Belém, we saw countries that had supported the campaign citing the opinion in their interventions, while those blocking progress were clearly concerned of its implications. Its potential to shape climate politics and policy is significant.
This year we have arrived at the mid-year climate negotiations in Bonn not only with the advisory opinion, but with a UN General Assembly resolution endorsing it. Despite a fierce campaign from the usual suspects, just eight countries, including the USA, Saudi Arabia, Russia and Iran voted against. That is a victory for multilateralism at a moment when multilateralism is under strain.
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But we know that advisory opinions alone are not enough. Legal clarity will not automatically translate into reduced emissions, increased finance flows or stronger national climate plans. That translation requires political will in the negotiating rooms, both here in Bonn and all the way through Fiji and finally in Antalya this November.
What the Pacific needs from this negotiating year
The Pacific put significant political capital into the joint Australia-Pacific bid for COP31. It is fair to say that the compromise of Australia holding the role of president of negotiations while the COP is held and presided over by Türkiye is not what we imagined.
But we in the Pacific are used to looking for silver linings. Both Australia and Türkiye have acknowledged the important role the Pacific will have at COP31, through the appointment of Pacific champions and the hosting of a Pacific Pre-COP in Fiji with a leaders event in Tuvalu. These are genuine opportunities to bring the world to our shores and ensure that Pacific issues are front and centre going into the final negotiations.
But we are not naive. Envoy positions and meeting locations are just the architecture of goodwill. We need to see that goodwill converted into concrete negotiating outcomes and finance.
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The Pacific helped put Australia’s climate minister Chris Bowen in this important position, so we expect to see Australia advocate not only for us, but to turn a mirror towards itself as one of the world’s biggest fossil fuel exporters.
At Bonn, and then in Antalya, we need ambition on mitigation that reflects the ICJ’s clarity on state obligations and the science. That means action on fossil fuels.
We need climate finance that is new, additional and accessible to the countries that need it most. In the Pacific we have already demonstrated what that looks like.
The Pacific Resilience Facility is the first climate finance facility designed, governed and managed by Pacific people, built specifically to reach the grassroots and community initiatives that larger funds routinely bypass. We need the international community to meet that ambition with contributions that reflect climate justice, starting with pledges to meet the $500-million capitalisation goal.
And we need the oceans – which are the lifeblood of the Pacific and a critical part of the global climate system – treated as a central element of the negotiations rather than a thematic aside.
Energy crisis driven by imported fossil fuels
The days of speaking about climate and fossil fuels purely as a moral issue are long gone. Pacific ministers recently adopted the Tassiriki Call for a Fossil Fuel Free Pacific, in the context of a deepening energy crisis that has triggered states of emergency in several Pacific nations. Our dependence on imported fossil fuels is both a climate and an economic vulnerability.
Conflict in the Middle East is pushing our region into an energy crisis. We are dependent on imported fossil fuels for 80% of our energy needs. My home country of Fiji could see an increased fuel bill of nearly three times our annual healthcare budget.
Comment: COP31 must persuade countries to make fossil fuel transition plans
We need the technical and financial support to transition to 100% renewable energy. Not only because it is what the world owes us for decades of carbon pollution that continue to render parts of our home uninhabitable, damaging ecosystems and culture. But because we must be part of that transition. Fossil fuels have proven to be the greatest source of damage to our climate, and with their volatility, to our sovereignty as well.
What next?
The demands have not changed. Greater action on mitigation, adaptation, finance, loss and damage: these remain the substance of what the Pacific requires from the international community. What has changed is the legal foundation beneath them.
The ICJ has affirmed that these are not requests. They are obligations. The task this year is to make the negotiations reflect that.
The post The Pacific made history in the courts – now we must do it in the negotiations appeared first on Climate Home News.
The Pacific made history in the courts – now we must do it in the negotiations
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