So-called "sustainable" funds do little if anything to fund green economy businesses and projects. This was revealed by an independent study commissioned by Greenpeace, which analysed Swiss and Luxembourgish funds. The formulation of the funds' sustainability criteria is "too vague", according to the non-profit.
Dr Regina Schwegler, co-author of the study, states that she was not actually surprised by these results. However, she also did not expect them to be this clear-cut.
Dr Schwegler explains that the criteria are often either not strict enough or simply not really implemented.
While the demand for sustainable investments and funds has increased, there is a risk that it will disappear just as quickly again if the promises made turn out not to have any real effect. And this is despite the fact that now is the perfect time to initiate long-term changes, according to Martina Holbach of Greenpeace Luxembourg.
Holbach stresses that there is a "unique opportunity" at the moment to steer the money that is being spent into "the right channels". She thinks that it is up to the financial sector to assume its responsibility in the economic transition.
A green economy play an important role in the government's plan to meet Luxembourg's sustainability targets over the upcoming years. According to Dr Schwegler, it is the only way to ensure that sustainable businesses can continue to be profitable.
Funding sustainable activities would enable sustainable companies to better refinance themselves. Capital flowing their way would help them cover the costs, Dr Schwegler states.
However, the current regulations applying to the market and so-called "sustainable" funds is closer to greenwashing than a true green economy, according to Greenpeace. The organisation is demanding serious political and economic change to improve the situation and make a real difference in the fight against climate change
Holbach demands that "sustainable" funds should be required by law to invest in actually sustainable activities, in order to support businesses which actively promote structural change and have taken steps to reduce their emissions.
