Litigation Risks Posed by “Greenwashing” Claims for ESG Funds
The growing ESG fund sector has also been the subject of recent public criticism from various quarters, particularly claims of greenwashing leveled against climate-focused funds, from media outlets including Time, USA Today, The Economist, Reclaim Finance, and Responsible Investor. According to the sponsors of a number of published studies, like As You Sow, InfluenceMap, and Morningstar, many funds with a sustainable or “green” investment thesis are not living up to their names and promises, because their portfolio holdings are not sufficiently aligned with specified standards for addressing climate change. Indeed, SEC Chair Gary Gensler published a video on March 1, 2022 in which he expressed skepticism about whether many ESG-focused funds live up to their names, asserting that the investing public does not have sufficient information to evaluate ESG funds
