Sustainable Sunday 🌳

What is Greenwashing?

A thread:
For the past few years, the popularity of ESG and sustainable financial products has been on the rise, which is mostly good news.

Unfortunately, this has given rise to those who try and capitalise on this popularity by way of Greenwashing.
In short, Greenwashing is to deceptively claim that your product is more ESG friendly than it actually is.

Sometimes Greenwashing is done in a manner where companies outright lie about how environmentally friendly their product is: This is often called out quickly.
However the real problem is that Greenwashing tactics usually have a tenuous link to a genuine claim, and it becomes very difficult to call someone out on it.
An example:

I recently came across a fund manager who claimed they'd been investing in line with ESG principles for 30 years. When I dug deeper I learnt that their claim was based on the fact that they'd never invested in armaments.
The fund manager wasn't exactly lying, but the truth was being wildly exaggerated to try and capitalise on ESG's popularity.

There is nothing illegal about this, but it is an example of how difficult it can be to spot Greenwashing.
Given the tricky nature of Greenwashing, it's important to do your own research on what makes an ESG product an ESG product and make your own judgment as to whether it really falls in line with your own ESG considerations.
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