Navigating the Complexity of Sustainable Investing: Transparency and Comparability Challenges in Fund Selection

This thesis explores the complexities of sustainable investing, focusing on the role of fund labels, ESG ratings, and regulatory frameworks in shaping investor decisions. The first part of the research provides an overview of the evolution of sustainable finance and the structural characteristics of the sustainable fund market. A central focus is placed on fund naming practices, assessing their potential to mislead investors in the absence of rigorous regulatory oversight. The study then examines the divergence among ESG rating methodologies and the European response to the lack of standardization through regulatory initiatives such as the SFDR, CSRD, and EU Taxonomy. In the final section, empirical analyses investigate the extent to which fund labels and ESG ratings influence investor behavior. The findings indicate that while sustainability labels attract capital inflows, their credibility remains questionable due to inconsistencies in ESG assessments. This research contributes to the ongoing discourse on sustainable finance by highlighting the need for improved transparency and standardized evaluation criteria to ensure the effectiveness of sustainable investment strategies.