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Laxman Pai, Opalesque Asia: Nearly 20% of Article 9 funds have more than 10% of their investments in companies that have violations of the UNGC principles or the OECD Guidelines for multinational enterprises, said a study.
These sustainable funds are breaching 'do no harm' standards, according to new research from Clarity AI. This means they have more than 10% of their investments in companies that have violations of the Sustainable Finance Disclosure Regulation (SFDR) classifications. 40% have more than 5% exposure.
To classify an organization as a sustainable investment it must fulfill all three of the above criteria and recent guidance on Article 9 funds suggests that the funds should be comprised of nearly 100% sustainable investments.
Clarity AI found that these Article 9 funds invest in 166 different companies that violate the UNGC or OECD principles.
The violations include bribery and corruption convictions (e.g., a financial services company pleading guilty in a bribery case), anti-competitive practices (e.g., a payments company, which was fined by the United Kingdom for collusion on prepaid cards), and environmental impacts (e.g., a tourism-based company admitted to dumping fuel and food waste along with thousands of gallons of sewage into the ocean). These violations, which might be escaping the fund managers' attention, are captured by Clarity AI's controversial model.
The model is powered by Natural Language Processing and reads more than 100,0...................... To view our full article Click here
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