Anger grows as funds fall in ESG rankings

The wealth management units of Deutsche Bank AG and BNP Paribas SA are contributing to a tidal wave of ESG fund downgrades, taking the industry’s AUM impacted by such reclassifications to well over $100 billion.

NP said it would remove Europe’s top ESG designation from funds worth $16 billion, while DWS Group’s reclassification will hit eight funds with about $265 million in inventory after last week’s downgrades of $2.1 billion announced. The industry has blamed unclear rules for the chaos as investors begin to vent their anger.

The DWS and BNP cuts are the latest in a series of ESG fund downgrades that have captivated investment giants like BlackRock and Pacific Investment Management. Amundi SA announced last week that it will reclassify almost all of its $46 billion into so-called Article 9 funds, as the EU’s top ESG designation is known. In all cases, the decisions were prompted by new guidance from the EU Commission on how to interpret the bloc’s regulations.

The development has alarmed viewers as the head of Europe’s largest retail investor organization now plans to meet with regulators and lawmakers to raise concerns that members are being subjected to greenwashing.

“We need much clearer guidance from the authorities to ensure we are not being misled and not being sold green-washed investment products,” said Guillaume Prache, managing director of Better Finance.

The group, which represents around four million financial services users in 25 countries, has scheduled meetings with the European Commission and the European Securities and Markets Authority, he said.

“Wealth managers need to explain to their clients that they are operating in an uncertain and rapidly evolving regulatory environment,” said Hortense Bioy, Morningstar’s global director of sustainability research. “To be clear, the EU has set out a very ambitious but also extremely complex disclosure regime.” Anger grows as funds fall in ESG rankings

Fry Electronics Team

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