6 tips for calling out greenwash

Greenwash is when a bank, investment fund or platform exaggerates their positive impact on the world to the public. And it’s rife out there!

Examples might be a public commitment to reaching net zero carbon emissions or achieving sustainable development goals while continuing to heavily fund and profit from companies and activities causing the problems. Or big shiny sustainability reports that you find out is only about 5% of what they actually do or invest in. 

We don’t have strict standards and labels in the UK so it’s left up to us to do some investigation to find the real deal.

Here are 6 tips for you with a focus on pensions and investments:

  1. Look at their language. Terms like ‘sustainable’ and ‘impact’ are – when you want to do more good in the world –  better than ‘ESG’ (environmental, social and governance). The UK Investment Association has clearly defined the differences between these terms but I always use the example of tobacco to illustrate. A tobacco company can have a high ESG score because it, say, uses water efficiently and has a more diverse workforce than peers. But the product still kills people. Aim for more good, not less bad.

2. Look for whether the provider is committed to positive impact at the company level or whether they just offer a couple of positive options. That will give you a sense of how seriously they take limiting their harm to the world. 

3. Unless it’s obvious, ask for a list of every company the fund invests in. Not just the top 10. Many firms aren’t used to this request so they may not have this in an easy to read format at first. There could be a HUGE list of companies. But that’s their problem not yours. You have a right to access this information.  

4. Ask how they prove their positive impact. What’s the evidence? This might be easier for those directing money straight to companies and projects than those who buy shares on a stock exchange. 

So in that case, a good place to start is to …

5. … ask for their company engagement and voting records. I.e. if and how they use their shareholder powers to influence change at companies?

Keep in mind that it isn’t just voting on existing shareholder proposals, but whether they actively submit their own in order to make a difference.

If they are voting AGAINST proposals for people and planet ensure they explain exactly why. It is true some proposals might not be very good – so ask why it wasn’t good and what they intend to propose that is better. 

Shareaction report on voting records so you can see how some of the biggest firms do.

6. There are a whole mix of green, impact and sustainable investment goals and strategies. And not all will suit your interests. So see what the firm or fund talks about most. It could be renewable energy, water, forests, gender, or achieving one or more of the 17 sustainable development goals. There is a fund for almost anyone. So don’t give up on what you care about too quickly.

Let me know if you have any questions! Happy to help 🙂

Tips taken from this May 2022 Greenwash conversation with Ethex, Big Exchange, Ethical Futures, WHEB and Triodos Asset Management.