ESG investors fearful of greenwashing risk

ESG Barclays greenwashing ASIC

13 September 2022
| By Laura Dew |
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Greenwashing is a “resounding theme” for environmental, social and governance (ESG) investors, specifically the regulatory action directed at fund classifications.

In a Barclays ESG report, focused on Asia-Pacific investors, the firm said there were concerns from ESG investors around greenwashing allegations and regulatory scrutiny.

“Based on our survey results, concerns are centred around a wide variety of issues, although investors appear most concerned about the risk of allegations and regulatory action directed at fund classifications and the rigour of ESG strategies.

“Interestingly, ESG teams are more worried about the marketing of consumer products than fund classifications.”

This followed a report by the Australian Securities and Investments Commission (ASIC) in May on how funds could avoid greenwashing when offering sustainable products to prevent consumers being misled.

Barclays said active engagement was the best way for investors to avoid greenwashing and that it was optimistic about transparency improving in Asia-Pacific.

“There is little doubt that the overall ESG transparency of the region should improve, with a number of APAC regulators racing to boost transparency among corporate issuers in the next few years.

“Active engagement with investee companies should not only raise awareness of the need for verified disclosure, but also disincentivise bad behaviour because an active, engaged investor is by definition a vigilant investor.”

 

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