The European Union’s new regulation aimed at preventing “greenwashing” requires fund managers to categorise funds based on their environmental, social and governance objectives. New investment data show that fewer than one fund in four has been listed under either of the two “green” categories introduced by the rules.

The EU’s Sustainable Finance Disclosure Regulation, whose phase-in started in March, is intended to boost transparency and keep fund managers doing business in the bloc from exaggerating sustainability claims. Funds being marketed in the EU must have one of three designations. Article 6 funds have no environmental, social and governance, or ESG, objectives. Article 8 funds — dubbed “light green” — are supposed to advance one or more ESG objectives. And “dark green” Article 9 funds have sustainable investment as their main objective.