Almost a quarter (23 per cent) of Article 8 funds are still at risk of greenwashing, according to analysis from MainStreet Partners.

The data provider’s 2025 ESG and Sustainable Barometer report analysed over 9,500 investment strategies across 460 asset managers and found that the proportion of Article 9 funds that have a greenwashing risk had fallen to 3 per cent.

It also found that 13 per cent of funds had failed its regulatory adherence assessment, which considers the relevant naming convention of the specific strategy together with the consistency of documentation, that it is clear and not misleading, and uses fitting and targeted language.

The report highlighted that there was a “clear downtrend” in asset manager ratings across each Sustainable Finance Disclosure Regulation (SFDR) classification and non-EU ratings.

Furthermore, breaches of the Carbon Transitional Benchmark (CTB) exclusions had risen to 49 per cent.

Commenting on the findings, MainStreet managing director, Neill Blanks, said: “At the start of 2024, you may have been forgiven for thinking we would see less regulatory complexity than in the past three years.

“Unfortunately, that was far from the case, not least as fund naming rules came into effect on both sides of the Atlantic.

“Regulatory scrutiny continues to intensify, with the threat of fines being imposed for those that do not adapt, on top of the associated reputational damage.

“As markets continue to adapt to new frameworks, we expect to see a broader range of ESG and sustainable investment products.

“These products will have clear and specific key performance indicators linked to the fund's ESG and sustainable approach, allowing investors to better understand the intentions of the strategy, and most importantly help reduce the risk of greenwashing.

“With clear regulatory expectations and evolving industry best practices, investors should have more confidence in the integrity of sustainable investment.”

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