In our last two pieces we’ve covered the following:
Now we’re going to dig into something of which all intentional investors should be aware: greenwashing.
The term “whitewashing” has been around for many years and has had several different meanings: from preferring white actors, directors, etc. in the entertainment industry to “glossing over or covering up something that is immoral, illegal, or otherwise bad (as in ‘a book which whitewashes the country’s troubled past’),” its significance is never good.
Recently we’ve also heard the term “sportswashing” – it was thrown around quite a bit when several US professional golfers joined the LIV Golf league (a Saudi Arabian-backed golf tour).
In a nutshell, “Sportswashing is the practice of an individual, group, corporation, or government using sport to improve their tarnished reputation, through hosting a sporting event, the purchase or sponsorship of sporting teams, or by participation in the sport itself.”
Replace “white” or “sports” with “green” and you might see where I’m going with this.
Companies have engaged in greenwashing via press releases and commercials touting their clean energy or pollution reduction efforts. In reality, the company may not be making a meaningful commitment to green initiatives. In short, companies that make unsubstantiated claims that their products are environmentally safe or provide some green benefit are involved in greenwashing.
You can see how this might become a problem when an investor is trying their best to support environmentally friendly businesses.
While many advisors can assist you with ESG investing, it might be worth finding one who specializes in it. Not only will you know that your values likely align with that advisor, but they will also have processes that help you…
Socially Responsible Investing (SRI)/Environmentally Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.