ESG investors fearful of greenwashing risk
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.”
AUTHOR
Laura Dew
Recommended for you
The volume that financial advisers have invested in private credit funds could be among disclosures that providers have to make to ASIC amid a regulatory crackdown on private markets.
Platinum Asset Management has appointed Northern Trust to provide asset servicing solutions for their $11 billion Australian funds.
A leading consultancy believes asset managers will be reluctant to expand overseas in 2025 as high distribution costs blow out potential benefits, but this is providing tailwinds for Australian third-party distributors.
Three of the largest ETF providers reported net inflow increases of more than 100 per cent during 2024, as Betashares admits it “underestimated” the scale of annual inflows the industry would see.
