An “ESG” smell test to separate the wheat from the chaff

Looking at the number of press releases regarding funds being launched, or relabelled, as “sustainable” or “responsible”, there is little doubt that “Responsible Investment” (RI) has become a significant trend in the industry over the past 18 months.

Isn’t it therefore fair to wonder if those in our industry are in danger of promising too much or outright misrepresenting their ESG records? What would the repercussions be if investors believe that companies are “greenwashing ”, i.e. portraying their products, activities or policies as environmentally friendly when in reality they are not1, in order to appeal to a growing segment of their customers? One clue may be found in leaked news from The Financial Times that the United Nations Principles for Responsible Investment (UNPRI) recently compiled a non-public list of 185 investors that could be excluded from their signatories due to potential greenwashing.

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