This week in ESG
New regulations prompt fund name changes, diversity efforts fall, and more climate action wins and setbacks.
Key highlights
🔀 ESG fund name changes – to comply with new anti-greenwashing regulations, 115 funds dropped ESG-related terms from their names in 2024. Of these, 48 opted for alternative ESG language and 50 added new ESG-related terms.
✈️ Heathrow runway expansion approved – the UK government has agreed to build a third runway at Heathrow airport, despite protests from environmental campaign groups.
🔥 LA wildfires made more likely by climate change – analysis from scientists at World Weather Attribution (WWA) concluded that the recent wildfires in LA were made 35% more likely by climate change through raising temperatures, increasing droughts, and extending the length of the fire season.
🧑💼 Vanguard loosens voting policies on diversity – the fund giant changed the wording of its proxy voting polices in the US to include less prescriptive language around board diversity, and removing explicit references to diversity of race and ethnicity in directors.
❌ Google ends diversity goals – Alphabet, Google’s parent company, formally announced that it would no longer seek to improve the diversity of its workforce.
🌳 Switzerland to reduce emissions by 65% – Switzerland has announced a new goal to lower emissions by 65% by 2035, using 1990 as the base. The country continues its path to net zero by 2050 - a target set by law.
Chart spotlight - greenwashing declines, but severity rises
Source: Nat Bullard; RepRisk, January 2025
The chart on the left shows the number of companies reporting at least one ESG risk incident, whether tied to its environmental footprint or misleading claims – each year. On the right, we see how the severity of incidents is evolving globally, based on the consequences of the incident, and the extent of its damage.
Why this matters?
It’s great to see greenwashing incidents begin to fall globally – especially in Europe – thanks to tighter regulations. In the UK, the impact of new rules like Sustainability Disclosure Requirements (SDR) is already visible in the ESG fund name changes we discussed earlier. These shifts should help bring greater clarity, making fund managers more thoughtful about how they market their funds.
However, a growing concern is the chart on the right. While the number of cases is dropping, the severity of reported greenwashing cases is rising - especially in high carbon sectors like the oil and gas industry. This highlights the need to avoid complacency. Investors must continue to stay diligent and understand their holdings and fund managers to ensure real ESG actions, not just a marketing spin.
Let’s keep raising the bar for transparency and accountability.
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