Several labels for sustainable investment funds sponsored by government and nonprofit organizations (GNPOs) have emerged in Europe. This paper examines the coherence of the signals sent by these sustainable labels versus those from the private sector. While some GNPO-labelled funds are perceived as bearing high Environmental, Social and Governance (ESG) risks, we find that labelled funds are more likely to be assessed as top ESG funds by private rating providers. Furthermore, equity funds with governmental and multiple labels are more likely to show better ESG ratings. Additionally, GNPO-labelled funds show greater alignment with article 9 of the Sustainable Finance Disclosure Regulation and tend to exhibit ESG terminology in their name, consistently with internal signals of sustainability coherence with GNPO labels. However, our research draws attention to the existence of sustainable signals that are not always coherent, jeopardizing their role as efficient tools for promoting sustainability.
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