Skip to content
  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management
Insurance Journal - Property Casualty Industry News

Featured Stories

  • Lemonade Posts Another Quarterly Loss
  • Tesla Must Pay $243M Over Fatal Autopilot Crash
  • Articles
  • Jobs
  • Markets

Current Magazine

current magazine
  • Read Online
  • Subscribe
  • Login
  • Front Page
    • National
    • International
    • Most Popular
    • Magazine
    • Forums
    • Blogs
    • Videos/Podcasts
    • Newsletters
  • News
    • Most Popular
    • National
    • International
    • East
    • Midwest
    • South Central
    • Southeast
    • West
  • Magazines
  • Research
  • Directories
  • Jobs
  • Features
    • Events
    • Forums
    • Market Directories
    • Quotes
    • Polls
    • Rankings & Awards
    • Insurance Giving Back
  • Subscribe

‘Green’ Investment Funds Less Vulnerable to Climate-Related Shocks: EU Watchdog

By Huw Jones | March 17, 2021
Email This Subscribe to Newsletter
  • Article

Funds investing in “brown” or polluting companies would be hit far harder than environmentally friendly “green” funds in a climate-related market shock, the European Union’s securities watchdog said on Wednesday in its first study of its kind.

Brown funds spread investments over a large number of the same companies, while green funds “herd” less, with each one investing in a different selection of companies, the European Securities and Markets Authority (ESMA) said.

Related: Swiss Re Announces Net-Zero Climate Targets in Underwriting, Investments AXA, Other Mega-Investors Seek to Avoid Portfolios with Global Warming Potential

“This suggests greater concentration risks existing across funds whose portfolios contain more polluting assets,” ESMA said.

ESMA published what it described as a first attempt to assess vulnerabilities to climate-related financial risks using data from 23,965 EU-based funds worth 10.7 trillion euros ($12.7 trillion).

“Within the European financial sector, investment funds are more exposed to climate-sensitive economic sectors than banks, insurers and pension funds. However, few investment fund climate-related financial risk assessments have been conducted,” ESMA said in its latest summary of market risks.

A preliminary climate risk scenario exercise showed that most brown funds’ losses ranged from 8% to 19% of affected assets, while losses in green funds ranged from 3% to 7%, ESMA said.

Brown funds also contributed more to total system-wide losses because they are more interconnected.

“This also relates to discussions around Environmental, Social and Governance (ESG) ratings for investment funds, and the need for greater fund transparency on exposure to climate-sensitive sectors,” ESMA said.

It looked at the growing use by investors of unregulated raters of company ESG scores as over 2.5 trillion euros in institutional assets globally track “inconsistent” ESG ratings.

ESMA, which has called for ESG raters to be regulated in the EU, said the absence of a common definition for ratings leads to diverging performance, and investor and issuer confusion and misunderstandings.

“These issues are ultimately detrimental to investor confidence and to the transition towards a more sustainable financial system,” ESMA said.

($1 = 0.8396 euros)

(Reporting by Huw Jones. Editing by Mark Potter and David Evans)

Copyright 2025 Reuters. Click for restrictions.

Topics Europe

Was this article valuable?

Thank you! Please tell us what we can do to improve this article.

Thank you! % of people found this article valuable. Please tell us what you liked about it.

Here are more articles you may enjoy.

florida-meteorologists-predictFlorida Meteorologist Predicts Where the Next Hurricane Will Hit–For a Price
The professional golfer celebrates a hole-in-one with arms raised in victory and joyful expression.From Golf Greens to Sausage Fests: The Wild World of Prize Insurance
Owners of Ship That Crashed Into Baltimore Bridge Sue Vessel’s Builder Hyundai
How an Alleged Ponzi Scheme Left Investors and Politicians in the South Reeling

Written By Huw Jones

More From Author

The most important insurance news,
in your inbox every business day.

Get the insurance industry's trusted newsletter

Email This Subscribe to Newsletter
  • Categories: International & Reinsurance NewsTopics: Climate Change, Climate change risks, climate financial risk, environmental social and governance (ESG) criteria, global warming, green investments
  • Have a hot lead? Email us at newsdesk@insurancejournal.com
More News
Surplus Lines Sector Shows 13.2% Rise in Premium Mid-Year: WSIA Report
J&J Talc Evidence Gets Review by Ex-Judge at Drugmaker Law Firm
Louisiana Department of Insurance Launches Enhanced Mobile App
Insurtech Root Swings to Q2 Profit on Growth in Partnership Channel
More News Features

Read This Next

  • 'Green' Investment Funds Less Vulnerable to Climate-Related Shocks: EU Watchdog
  • This Hard Market Explained
  • New York Court Blocks Suit Against Social Media Giants Over Buffalo Racial Massacre
  • Delay in Upping Its Claims Offer Could Cost AIG, Federal Appeals Court Says
  • 'Soft Market Under Stress' Offers Unique Window of Opportunity for Insurance Buyers

Insurance Jobs

  • Insurance Account Executive/Manager Wanted Flexible Hours, Potential Equity - Dix Hills/Deer Park, NY
  • Sales Agent - Encino, California
  • Cybersecurity Lead Architect - Hartford, CT
  • Outside Property Claim Representative Trainee – Bozeman - Bozeman, MT
  • VP, Data Engineering - Hartford, CT
MyNewMarkets
  • DIY Home Inspections Are Taking Over, Firms Say
  • Six Things to Know About Umbrella Insurance
  • What to Know About Construction and Environmental Liability
  • How Embedded Insurance Supports Real Livelihoods in the Growing On-Demand Economy
  • How to Keep Third-Party Events from Becoming First-Party Losses
Claims Journal
  • Lemonade Posts Another Quarterly Loss But Car Growth Continues
  • Missouri's 2025 Insured Losses From Severe Weather Approaching $2 Billion
  • Prudential in $100M FTC Settlement Over Unit's Healthcare Promises
  • Allstate to Pay About $500K on Georgia Claim Highlighted in Hearing, Senator Says
  • J&J Talc Evidence Gets Review by Ex-Judge at Drugmaker Law Firm
Academy of Insurance education
  • August 7 EPLI Basics
  • August 14 Managing and Insuring Reputational Risk
  • August 19 How To Write: Flood
  • August 21 Workers' Comp Crash Course

Insurance News

  • News by Region
  • News by Topic
  • Yesterday

Site Search

Features

  • Insurance Markets Directory
  • Forums
  • A.M. Best Company Ratings
  • Industry Events
  • Agencies For Sale
  • Newswire
  • Insurance Jobs
  • Rankings & Awards

Connect with us

  • Email Newsletters
  • Magazine Subscriptions
  • For Your Website
  • RSS Feeds
  • Twitter
  • Facebook
  • LinkedIn
  • Do Not Sell My Info

Insurance Journal

  • Submit News
  • Advertise
  • Subscribe
  • Reprints
  • Link to Us
  • Contact Us

Wells Media Group Network

  • Insurance Journal
  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management
© 2025 by Wells Media Group, Inc. Privacy Policy | Terms & Conditions | Site Map