Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

Cookie cutter RI approach a risk for ‘rainbow-washing’

sustainability/Stewart-Investors/responsible-investing/

20 August 2021
| By Chris Dastoor |
image
image image
expand image

Responsible investors are at risk of ‘rainbow-washing’ by not following appropriate frameworks for their goals, according to Stewart Investors Sustainable Funds Group.

‘Rainbow-washing’ referred to the different colours applied to the 17 UN Sustainable Development Goals (SDGs) and was separate to the term used for businesses that pandered to LGBTQI+ social issues.

Nick Edgerton, Stewart Investors Sustainable Funds Group portfolio manager, said the firm avoided frameworks like net zero, UN Principles of Responsible Investment (PRI) or UN SDGs in its assessment process as they believed these were over-simplistic.

“They’re all useful to think about or use as a framework to think about sustainable development, but ultimately none of them have a purpose backing investment,” Edgerton said.

“The SDGs are incredibly important for the world, but they’re set up for the public sector and business – they’re not set up for investors and so we try and use a whole range of sustainability frameworks that validate our approach instead.

“We do look at our portfolio and how it can relate to things like the SDGs but we’re just really cautious about ‘rainbow washing’.

“The SDG has a rainbow of colours that applies to the different batches for the 17 goals, so the idea of rainbow-washing is perhaps embellishing how business or investment activities are contributing to them when the targets are very specific around certain social and environmental outcomes.”

The firm preferred frameworks like Project Drawdown which looked at how emissions could be drawn down from the economy by a range of business activities.

“What we have done instead is use rigorous frameworks like Project Drawdown which can illustrate how investing in everything from the electrification of the economy through to more sustainable and regenerative agriculture can contribute to a lower carbon future,” Edgerton said.

“Investing in line with what is needed is really important – and the net zero and Paris goals are important – but we really need to understand how to get there.

“You can put a flag in the ground for 2050 of where we need to get to, but then the recommendation is that translates to a pathway of quite reasonable decline in emissions.”

Edgerton said the firm was cautious about the frameworks they followed and what those meant for investors in the long-term.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Significant ethical issues there. If a relationship is in the process of breaking down then both parties are likely to b...

4 days 16 hours ago

It's not licensees not putting them on, it's small businesses (that are licensed) that cannot afford to put them on. The...

1 week 4 days ago

So we are now underwriting criminal scams?...

6 months 2 weeks ago

After last month’s surprise hold, the Reserve Bank of Australia has announced its latest interest rate decision....

6 days 12 hours ago

Libby Roy has been appointed as an independent non-executive director on the board of AZ NGA....

3 weeks 6 days ago

A professional year supervisor has been banned for five years after advice provided by his provisional relevant provider was deemed to be inappropriate, the first time th...

2 weeks 5 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
74.26 3 y p.a(%)
3