A study from Voxeurop and European Investigative Collaborations shows that companies engaged in oil extraction, car manufacturing and fashion are some of the biggest recipients from EU green funds.

Investments promoted as ESG are required to classify as being either an Article 8 or 9 fund, according to the EU’s Sustainable Finance Disclosure Regulation. Article 8 funds are considered ‘light green’ and are supposed to promote environmental or social characteristics. Article 9 are funds that have sustainable investment as their main objective.

However, the researchers analysed over 4,000 ‘green’ funds (Articles 8 and 9) from nearly 800 financial institutions. They found that 200 of the world’s most polluting companies received a total of $85bn in investments from Article 8 funds and $2bn from Article 9 funds.

There were three carmakers in the top ten fund recipients: Stellantis is the fourth highest recipient of green funds, while Mercedes was fifth and Toyota tenth. Together the shares in these three companies finance almost 30 million tonnes of CO2.

Stellantis has received €5bn from green funds with a ZEV share of just 7 per cent, while Mercedes has received €4bn with a ZEV share of 13 per cent. This means the vast majority of supposedly sustainable investments in these carmakers is going towards highly carbon-intensive activities. Additionally, there is no evidence that the capital invested by asset managers covered under this investigation is guided to support these companies in their climate transition and decarbonisation.

The inclusion of aircraft manufacturer Airbus in the top ten recipients of green funds is also a surprise. Airbus delivered over 700 commercial aircraft in 2023. 99.4 per c ent of the fuel these planes run on today is fossil fuel.

Xavier Sol, sustainable finance director at T&E, said: “Europe's biggest green portfolios are just the same dirty companies, repackaged as sustainable. We need private capital to accelerate the green transition rather than hinder it. Only investments earmarked for green activities, like zero-emission technologies, should be given a sustainable label.”

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