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

Featured Stories

  • Lengthy Government Shutdown to Impact Insurers
  • FEMA, Customs and Border Protection Staff Data Stolen
  • 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’s Citizens Is Deferring Flood Coverage Proof While NFIP Is Shut Down
Gallagher Sues Two Former Brokers Who Started Own Firm
Florida Reforms Are Truly Making a Difference, Gallagher Re Report Finds
AIG Promotes 3 to Lead North America Commercial as Bailey Retires

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
Bank of England Says Soaring AI Valuations Risk Sharp Market Correction
Tokio Marine Weighs More Than $10 Billion of International M&A
French Wine Output to Fall Below 2024 After Fires Ravage Vines
Musk’s X Settles Ex-Twitter Executives’ $128 Million Severance Pay Lawsuit
More News Features

Read This Next

  • 'Green' Investment Funds Less Vulnerable to Climate-Related Shocks: EU Watchdog
  • Update: National Flood Insurance Program Expires
  • Florida Reforms Are Truly Making a Difference, Gallagher Re Report Finds
  • House Bill Aims to Combat Forum Shopping in Trucking Industry Lawsuits
  • September Marks Rare Absence of Hurricane Landfalls in US

Insurance Jobs

  • Senior Insurance Agent (3+ Yrs P&C Exp | W-2 | Warm Leads | In-Office Only) Senior Insurance Agent (3+ Yrs P&C Exp | W-2 | Warm Leads | In-Office Only) - Westminster, CO
  • Customer Service Agent – Personal Lines - Bethlehem, PA
  • Claims Manager, Insurance & Risk Management - Queens, New York
  • Consultant, Data Management - Hartford, CT
  • Bodily Injury Paralegal Specialist (Remote – Georgia) - Georgia, GA
MyNewMarkets
  • How to Attract the Next Generation to Insurance
  • 5 Evolving Trends Shaping Architects and Engineers Coverage
  • Rethinking Assault & Battery Liability in Commercial Real Estate
  • From Golf Greens to Sausage Fests: The Wild World of Prize Insurance
  • As Schools Prepare to Pay Athletes, What Role Will Insurance Play?
Claims Journal
  • Engle Martin Acquires London-Based Integra Technical Services Claims Adjusters
  • Musk Settles Suit by Ex-Twitter CEO Over Denied Severance Pay
  • Toyota Explores Small Drone System for Off-Road Vehicle Use
  • New York City Sues Social Media Companies for Allegedly Addicting Children
  • Survey Shows Homeowners Warming to DIY Digital Claims, Insurance Processes
Academy of Insurance education
  • October 9 Forward Into The Past: Certificates of Insurance, Additional Insureds, and Other Contractual Risk Transfer Issues
  • October 16 Auto Insurance: You Get What You Pay For
  • October 23 Gotchas That'll Getchya - Latest Policy Language That'll Get You Sued
  • October 30 Challenges in Agency Mergers – Reducing Staff Flight and Avoiding E&O Claims

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