Nearly a fifth of global carbon emissions is propped up by billions of euros in European “green” investments

In 2024, banks and other asset managers held investments worth more than $33 billion in the top oil companies responsible for 18% of the world's annual greenhouse gas (GHG) emissions through so-called "green" funds that supposedly champion a sustainable economy, reveals an investigation by Voxeurop and The Guardian. The funds in question are marketed by such major players as JP Morgan, DWS/Deutsche Bank and BlackRock.

Big Oil’s “green investments”

One of the goals of the Paris Climate Agreement is to "align financial flows with a pathway to low greenhouse gas emissions and climate-resilient development". However, many global asset managers, while publicly supporting the agreement, continue to fund some of the world's most carbon-intensive fossil fuel companies through investments marketed as “green”.

The “green” funds we identified are those disclosing under the EU's Sustainable Finance Regulation (SFDR), which came into force in 2021. Articles 8 and 9 of the SFDR deal with the promotion of “environmental or social” objectives and “sustainable investments” respectively.

The law applies to all financial institutions, regardless of their nationality, as long as they operate in the EU financial market, the largest in the world. Indeed, financial institutions originally based in the US and UK accounted for a significant share of the total, investing $9.1bn and $6.6bn respectively – together accounting for 46% of the total.

The ten financial institutions with the largest fossil-fuel stakes in their Article 8 and 9 funds together hold $12.6 billion, representing more than 40% of green investments in the carbon majors. We have already published comments from most of them in our previous research.

Asset managers continue to invest in fossil-fuel majors while retaining their SFDR classifications, which allow for such holdings. “It is diabolical for banks and asset managers to invest billions in major fossil-fuel companies under the rubric of ‘green investing’ when we need to accelerate investments in non- and low-carbon energy, in carbon efficiency, and in carbon removal technologies,” said Richard Heede, head of the Climate Accountability Institute.

Our investigation analysed the “green” investments in 37 fossil companies listed in the Carbon Majors report, 34 of which are investor-owned and account for 80% of the carbon emissions of the entire publicly traded fossil-energy industry. We used data from the last quarter of 2024 and the first quarter of 2025 for listed companies, sourced from the London Stock Exchange Data & Analytics.

The top ten carbon emitters, including TotalEnergies, Shell, ExxonMobil, Chevron, BP, Lukoil, Equinor and the three predominantly state-owned companies Saudi Aramco, Coal India and Abu Dhabi National Oil Company, accounted for 60% of all green investments, amounting to $21 billion. Of this, $18 billion concerned the top five firms according to a 2023 ranking for oil and gas production among investor-owned companies.

These companies were responsible for 13% of global GHG emissions in 2023, twice the annual emissions of all other public and private companies operating in Europe. Other investments by funds following EU sustainable finance rules include US fracking company Devon Energy and Canadian tar-sands company Suncor.

“Positive engagement” vs “disinvestment”

Investors often claim that holding shares in these companies allows them to influence the firms’ pursuit of climate goals through a "positive engagement approach rather than a policy of exclusion (or disinvestment)". However, EU rules on sustainable finance do not require asset managers to be transparent about their positive engagement practices. So far, none of the oil and gas majors have business plans that line up with international climate targets. Indeed, many of them have watered down their plans over the past year, according to a report by Carbon Tracker published in April 2025.

“We know from our surveys that 50% of people in Europe want to have an impact with their (green) investments. However, these people are being systematically misled,” says Nicola Koch, Head of Retail and Impact Investment at the Sustainable Finance Observatory. This is why the EU Sustainable Finance Platform, an advisory body to the European Commission, “has clearly advocated that impact needs to be integrated into the sustainable finance framework”, he adds.

The aim of EU lawmakers was to promote transparency around the level of climate performance (and other socio-environmental impacts) of financial products. In this way, investment might be encouraged in cleaner projects, so helping EU countries achieve climate neutrality by 2050. But loopholes and lax enforcement have allowed massive investment in carbon-intensive activities, as previously revealed by Voxeurop. Meanwhile, the labels set up by the EU regulations have been used to showcase a financial product’s (often bogus) environmental credentials. 

So far, this situation has endured despite attempts to resolve it. The European Securities and Markets Authority (ESMA) called for sweeping reforms to tackle greenwashing. In August 2024, it adopted tighter guidelines for the use of sustainability and ESG (promoting Environmental, Social and Governance) related terms in fund names, banning funds with significant fossil fuel investments from labelling themselves as “green”, “ESG” or “sustainable”.

The deadline for application of the new guidelines is 21 May 2025. The guidelines are not legally binding, but after 21 May national financial regulators will be able to require companies to report publicly whether their products comply with the rules and could choose to sanction any guideline breaches. As the compliance table provided by ESMA shows, most national authorities have decided to comply.

---

---

Several asset managers have already rebranded their funds – or are in the process of doing so – to align with ESMA guidelines. BlackRock and JP Morgan Asset Management announced in March and April respectively that they would remove words such as “sustainable” and “ESG” from some fund names. Campaigners said they could have acted sooner. JP Morgan, DWS, LGIM and State Street all declined requests to comment.

By March 2025, less than two months before the new ESMA guidelines came into force, at least $2.6 billion of funds were still not compliant. Some of the funds with the largest investments in fossil fuels were BlackRock's “iShares MSCI Europe ESG Enhanced” ($160 million in TotalEnergies, Equinor, Eni, Repsol, Aker, EQT, OMV), L&G's “MSCI Europe Climate Pathway” fund ($88m in BP, Shell and TotalEnergies) or Robeco's “Sustainable Global Stars” fund, which invests $40m in TotalEnergies.

According to the new guidelines, other funds containing transition-related words combined with an environmental term will have to ensure that the investments “are on a clear and measurable path to social or environmental transition, or are made with the objective of generating a positive and measurable social or environmental impact alongside a financial return”. They include the “Cardano ESG Transition” fund, which is investing $25 million in fossil fuel companies or  “iShares MSCI Europe ESG CTB Enhanced” ($160 million in TotalEnergies, Equinor, Eni, Repsol, Aker, EQT, OMV) – where CTB stands for “carbon transition benchmark”. 

However, analysts have criticised this aspect of the guidelines, as major oil companies are reportedly retreating from their renewable energy commitments.

“Companies actively pushing fossil fuel expansion projects are a major obstacle to the transformation of the European energy markets. They should not be eligible for any ESG funds, including 'transition funds' under SFDR”, said Fiona Hauke, senior researcher at Urgewald. She was commenting on recommendations recently published with the World Wildlife Fund for improving the SFDR.

“For a fund claiming to be ‘green’, holding investments in major fossil fuel companies should be a red line,” said Giorgia Ranzato, sustainable finance manager at Transport & Environment (T&E). “Since oil majors are not contributing meaningfully to the energy transition, any investment in such companies by a green fund is essentially greenwashing. To effectively combat this T&E and other organisations advocate for a meaningful review of the SFDR.”

Enough to prevent greenwashing?

A BlackRock spokesperson said: “BlackRock's funds are managed in accordance with their investment objectives, that are clearly disclosed in each fund's prospectus and on BlackRock’s website. Our sustainable funds are managed in line with applicable regulations governing sustainable investing. For investors that have decarbonisation investment objectives we offer a range of products that provide such exposure.”

Contacted by Voxeurop, a spokesperson for Robeco said its Sustainable Global Stars fund would remove “sustainable” from its name. The spokesperson said the fund had a 20% better carbon footprint than the market index and that the firm had “productive and intensive engagement” with TotalEnergies.

“These guidelines are far from enough to prevent greenwashing in investment funds”, says Paul Schreiber, senior policy analyst at Reclaim Finance. “Asset managers who do not want to change the composition of their funds to match the guidelines can simply change their names. This means that investors wanting to avoid fossil fuels must look for funds with a ‘sustainable’ or ‘environmental’ label or they could find themselves investing in oil companies by mistake.”

“We need strict rules that ban investments in companies developing fossil fuels from any fund with an ESG-related description”, Schreiber adds. “This is precisely what the SFDR failed to do. In this context, the review of the regulations must include strict fossil-fuel exclusions covering all fund categories.”

A ESMA spokesperson said: “Our focus is on supporting [national authorities] to implement the current guidelines, as they are only becoming applicable to existing funds on 21 May. In the future, if needed, we will evaluate the possibility of changes to the guidelines together with competent authorities, also bearing in mind potential developments in the review of the SFDR.”

TotalEnergies has said the company supports the objectives of the Paris Agreement and that its strategy is consistent with a global temperature rise of less than 2℃. Shell declined to comment. Other fossil-fuel firms did not respond to requests for comment.

Editing: Harry Bowden, Gian-Paolo Accardo

🤝 This article is part of an investigation coordinated by Voxeurop with the support of Journalismfund Europe. It is published in partnership with the Guardian.