How to do ESG due diligence and avoid greenwashing in portfolios

This article is part of
A guide to ESG and responsible investing

Frederic Samama, chief responsible investment officerat CPR Asset Management says the problem with some portfolios is they award companies a score for each of the categories - environmental, social and governance - using the average of those three scores to decide if a company is ESG compliant.

He says this can mean a company scores very highly on one or two of the categories, and so is included in portfolios, even if it performs poorly on the third category.  

A time of plenty

Canaccord Genuity Wealth Management’s Patrick Thomas takes a simpler view. He says: “The way to assess whether a fund or company is ESG compliant is to ask whether the business being invested in makes the world a better place.

"There are of course subjective considerations as to what some people think is ethical or not, but I think there are some areas, such as water supply, where there isn’t really a dispute, and we focus on those.”