Greenwashing is when a company markets itself as having a positive effect on the environment but may be manipulating the facts or doing small efforts to be conscious but is participating in unsustainable activities.
Examples
Examples are H&M which is being sued for allegedly selling a line of clothing called “Conscious Choice Collection” that uses more water to manufacture than their other collections.
Forbes published an article stating, The Economist had researched the 20 largest ESG funds in 2021 and what they found was that all of the companies had investments in, “fossil-fuel producers, while others held stakes in oil producers, coal-mining, gambling, alcohol, and tobacco.”
Why?
Greenwashing has been possible because there are many companies that do ESG evaluations, so it can be challenging to find one that is trustworthy. Another thing to consider, according to The Motley Fool, ratings don’t account for the supply chain emissions.
ESG Rating Companies
The best way to protect your theme is to do your research. Here are the top 8 companies that provide ESG ratings according to The Impact Investor.
- Sustainalytics ESG Risk Ratings (subsidiary of Morningstar)
- MSCI ESG Ratings
- Bloomberg ESG Disclosures Scores
- FTSE Russell’s ESG Ratings
- Institutional Shareholder Services Ratings and Rankings
- S&P Global ESG Scores
- CDP Climate, Water and Forest Scores
- Moody’s ESG Solutions Group
Mindful Reminder
Be patient. Research takes time. Find a quiet space in your home and give yourself enough time to find the right investment that suits your theme. If you find yourself getting frustrated with all the information, take a couple of deep breaths and with a calm mind continue. Or put it down until you are peaceful again.
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Related Posts
The Economist. (2021). Sustainable finance is rife with greenway time for more disclosure. Retrieved from: https://www.economist.com/leaders/2021/05/22/sustainable-finance-is-rife-with-greenwash-time-for-more-disclosure
Forbes. (2022). Greenwashing and esg: what you need to know. Retrieved from: https://www.forbes.com/advisor/investing/greenwashing-esg/
The Impact Investor. (2022) 8 best esg rating agencies – who gets to grade? Retrieved from: https://theimpactinvestor.com/esg-rating-agencies/
Investopedia. (2022). What is environmental, social, and governance (esg) investing. Retrieved from: https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp
The Motley Fool. (2022). Examples of greenwashing. Retrieved from: https://www.fool.com/investing/stock-market/types-of-stocks/esg-investing/greenwashing-examples/
Nerdwallet. (2022). Greenwashing. what is it? Retrieved from: https://www.nerdwallet.com/article/investing/greenwashing