17% of Article 9 funds perform worse in impact than the average Article 8 fund, with investments in sectors like alcohol, luxury cars and airlines, according to “the first” open database on science-based impact of funds” launched by The Upright Project, a Finland-based impact data provider.
Additionally, 38% of the funds analysed were found to be “net negative”, meaning they generate more harm than benefit. The open-access database analysing the sustainability of over 35,000 mutual funds and ETFs with science-backed impact data is supported by Upright’s proprietary impact model, which uses natural language processing to analyse over 250 million scientific articles, public databases, and company disclosures.
On a positive note, 98% of Paris-aligned funds have a net positive impact, likely due to stricter exclusions aligned with the Paris Agreement, though many still include industries like luxury cars and airlines. While Article 9 and ESG-named funds outperform the market in environmental contributions, they lag in social impact. Over 250 investors currently use this database for sustainability reporting and investment management, shared the providers.
According to ex-UN PRI ( Principles for Responsible Investment) innovation lead Mikael Homanen, who is head of scientific research and innovation at Upright, regulatory developments and growing awareness in the financial markets have highlighted the sustainable attributes of investments. However, existing financial and non-financial metrics—like ESG ratings, sustainability labels and individual principle adverse impact indicators—still fall short of addressing the real-world impacts of investments.
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“Investments deemed ‘sustainable’ today may still carry hidden costs, negatively impacting our lives, society, and the planet. Meanwhile, companies creating positive impacts often go underappreciated by conventional ESG data and financial metrics. These impacts—both positive and negative—can eventually have financial significance, but without the right information, they remain overlooked,” said Homanen.
Ten years ago, the most popular metric in sustainable investing was ESG ratings, points out Homanen, but in the future, measuring the impact of funds would be the next frontier in sustainable investing. “Instead of maximising the number of reports relying on already available metrics, we should identify the most meaningful impacts to measure and then strive to improve how we measure them,” he added.
Making impact data accessible empowers beneficiaries, asset owners, and asset managers to better understand the true impact of their investments, paving the way for a more informed and responsible investment landscape. “This more fit-for-purpose and transparent data will be helping both the managers building and marketing their funds, as well as those investing in them – ranging from pension funds to individual retail investors,” says Homanen.
Upright founder and CEO, Annu Nieminen, emphasised the need for transparency on investment fund impacts beyond regulatory labels, ESG ratings, and adverse impact indicators for sustainable investing to truly direct capital to beneficial companies. “Not everyone will be pleased with the findings, but no smart investor can afford to ignore this scientific lens on investment products,” said Nieminen.
