 Does the EU sustainable finance disclosure regulation mitigate greenwashing?Rabab Abouarab, Tapas Mishra and Simon Wolfe The European Journal of Finance, 2025, vol. 31, issue 8, 957-989 Abstract: This paper examines the impact of the Sustainable Finance Disclosure Regulation (SFDR) on greenwashing by equity mutual funds in the EU. We propose a unique measure called the Greenwashing Index, based on a fund's decarbonisation effort relative to its flows, to quantify the level of greenwashing. Using a difference-in-differences analysis, we find that following the enactment of the SFDR, Article 9 funds experience a lower level in their greenwashing index relative to a control group of funds. However, for Article 8 funds we do not observe any significant reduction in the level of their greenwashing index relative to the same control group. We also use a regression discontinuity design (RDD) and find that the decline in the greenwashing index is more concentrated in Article 9 than in Article 8 funds which indicates a different effect of the SFDR on greenwashing behaviour between those funds. Our findings also show that Article 9 funds decarbonise their portfolios by primarily following a portfolio tilting strategy to overweight low carbon-intensive holdings following the introduction of the SFDR. Date: 2025 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:31:y:2025:i:8:p:957-989 Ordering information: This journal article can be ordered from DOI: 10.1080/1351847X.2025.2457944 Access Statistics for this article The European Journal of Finance is currently edited by Chris Adcock More articles in The European Journal of Finance from Taylor & Francis Journals |
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