Money Funds and Greenwashing
Yahoo Finance posted the article, "Money Funds May Be Next Target in Fight Against Greenwashing," which tells us, "An often overlooked part of the burgeoning ESG industry may soon encounter greater global scrutiny from regulators. Analysts at Fitch Ratings expect rulemakers to push for better transparency from managers of money market funds. This comes as other ESG-related offerings that fall short on the standards front increasingly struggle to keep and attract investors. The integration of environmental, social and governance factors into money funds has accelerated in recent years, especially in Europe where in 2021 assets surged by about 200% as more funds took on the ESG label." The Bloomberg piece adds, "Roughly 350 billion euros ($369 billion) is invested in ESG-focused money funds, accounting for 23% of the total market for European money funds. By comparison, there's just $9 billion in US prime money funds that have ESG in their names.... Large ESG reporting disparities also exist between the two regions, creating inconsistencies in reporting standards across the market. In Europe, there's 'a more prescriptive, standardized framework,' while in the US, it's more of 'a disclosure regime,' said Greg Fayvilevich, senior director and global head of Fitch's fund and asset manager ratings group. Money funds are considered among the least risky investments available because they traditionally hold only the safest government and corporate-bond securities. The average yield for money funds has risen above 0.3% in Europe from about negative 0.6% at the start of the year. Yields are now at the highest level since 2014."
