What's Actually Inside ESG Funds? An Independent Holdings Analysis
There are now over 5,000 funds globally with "ESG," "sustainable," "responsible," "socially responsible investing (SRI)," or "ethical" in their name. The label suggests these funds have been screened. That the companies inside them meet some standard. That your money is not funding the things the label implies it excludes.
But what does the independent evidence actually say about the companies inside these funds?
We checked the top holdings of widely held ESG funds — the ones most likely to appear in a UK investor's portfolio or pension — against Mashinii's independent data. Not ESG ratings. Not corporate sustainability reports. Court filings, regulatory actions, investigative journalism, and NGO reports.
The results explain why ESG ratings from different providers disagree — and why fund labels alone are not sufficient for ethical due diligence.
The Label Problem
Before looking at specific holdings, it is worth understanding what an ESG label actually guarantees.
In the UK, the FCA's SDR regime introduced four voluntary sustainability labels in 2024. But most funds on the market were labelled before SDR existed — by the fund manager, using their own criteria. There is no retrospective requirement to relabel or withdraw.
Globally, the label "ESG" has no legal definition. A fund can call itself ESG-integrated simply by considering ESG factors alongside financial factors — without excluding any company or sector. "Considering" ESG is not the same as "screening for" ESG.
This means: the letters "ESG" on a fund factsheet tell you the fund manager thought about environmental, social, and governance factors. It does not tell you what they concluded or what they excluded.
What We Found
We examined the top holdings of several prominent ESG fund categories. Rather than naming specific funds — which would reflect a single point-in-time snapshot — we focused on the companies that appear most frequently across ESG fund holdings lists.
Companies That Appear in Multiple ESG Funds Despite Adverse Records
Amazon (AMZN) appears in the majority of ESG-screened index funds and many actively managed ESG funds. Amazon scored -50 on Honest & Fair Business, -40 on Fair Trade & Ethical Sourcing, and -30 on Fair Pay & Worker Respect in our methodology — reflecting OSHA citations for warehouse safety, a $2.5 billion FTC settlement, and documented supply chain concerns.
View Amazon's full score breakdown
Meta (META) is held across most ESG-integrated index funds. Meta scored -70 on Honest & Fair Business and -50 on Safe & Smart Tech in our methodology — reflecting a 1.2 billion euro EU GDPR fine, multiple FTC actions on privacy, a $1.4 billion Texas facial recognition settlement, and documented concerns around content moderation and youth safety.
View Meta's full score breakdown
JPMorgan Chase (JPM) appears in many ESG and responsible finance funds. JPMorgan scored -70 on Honest & Fair Business and -40 on Safe & Smart Tech in our methodology — reflecting significant regulatory settlements across multiple jurisdictions, including a reported $920 million settlement with US authorities related to trading practices.
View JPMorgan's full score breakdown
Coca-Cola (KO) frequently appears in ESG funds and global sustainability indices, buoyed by strong sustainability reporting and water stewardship programmes. The independent record tells a different story: Coca-Cola scored -60 on Better Health for All and -50 on Planet-Friendly Business in our methodology — reflecting documented regulatory actions on public health impact and plastic pollution.
View Coca-Cola's full score breakdown
ExxonMobil (XOM) remains in some ESG funds that use a "best-in-class" approach within the energy sector. Independent data includes decades of environmental regulatory actions and occupational safety citations. ExxonMobil scored negatively on 9 out of 11 dimensions in our methodology, including -40 on Fair Pay & Worker Respect and -40 on Better Health for All.
View ExxonMobil's full score breakdown
How Companies With Adverse Records End Up in ESG Funds
Three mechanisms explain the pattern:
1. Best-in-Class Selection
Many ESG funds do not exclude sectors. Instead, they select the "best" companies within each sector. The "best" oil company is still an oil company. The "best" tech giant may still have an extensive adverse record on privacy or labour. Best-in-class means better than peers, not good in absolute terms.
2. Aggregate Scores Hide Dimension-Level Problems
A company with a +50 on environmental metrics and a -40 on labour rights might produce an aggregate ESG score of +5 — "slightly positive." The fund screen sees a positive aggregate score. The labour rights violation disappears into the average.
This is why dimension-level scoring matters. An aggregate cannot tell you that a company is simultaneously excellent on one dimension and problematic on another. It can only tell you the net.
3. Disclosure Quality as a Proxy for Conduct
ESG ratings reward companies that produce detailed sustainability reports. A company with a 200-page GRI-aligned report and a robust CDP disclosure will score well — because it is good at reporting. Whether it is good at the things it reports on is a separate question that the rating may not capture.
Companies that report well and behave well will score well everywhere. Companies that report well but behave poorly will score well on ESG ratings and poorly on independent verification. It is this second category — the gap between self-reports and evidence — that fund labels fail to catch.
What This Means for Fund Selection
If you hold or recommend ESG-labelled funds, the findings above do not mean those funds are worthless. They mean the labels are incomplete.
For individual investors: Check the top holdings of your ESG fund against independent data. You may find companies that conflict with your values on specific dimensions. If you do, you have options: switch funds, engage the fund manager, or move to a more actively screened alternative. Run an audit on your portfolio.
For financial advisors: Fund due diligence for ethical mandates should include independent holdings verification, not just a review of the fund label and factsheet. The FCA Anti-Greenwashing Rule makes this a compliance consideration, not just a service enhancement.
For fund selectors: When comparing ESG funds, do not compare their ESG ratings — those are inputs, not outcomes. Compare what is actually inside them using independent data. Two funds with the same ESG label and similar ratings can hold very different companies with very different independent records.
The Verification Standard
Independent verification means checking fund holdings against data that companies did not produce about themselves. Court filings, regulatory enforcement records, investigative journalism, and NGO reports. Sources with no commercial relationship to the companies being assessed.
This is the standard Mashinii applies across 11 ethical dimensions. It is the standard that fund labels, ESG ratings, and sustainability reports do not meet on their own — because they all start from the same place: what the company chose to tell you.
The question is not whether a fund carries an ESG label. The question is whether the companies inside it have a clean independent record on the dimensions you care about.
Read our step-by-step guide to checking if a portfolio is ethical.