Interest in environmental, social and governance-guided investments are on the rise, but many critics are concerned some companies may be using 'greenwashing' techniques to dupe investors.
Greenwashing is when a company purports to be environmentally conscious, or in this case implementing ESG policies for marketing purposes, but does not actually make any notable efforts.
This technique can be used to manipulate investors into wrongly believing they are investing in a company or corporation that is making a positive change in the world when actually it is not.
Lebec Consulting has spent the better part of the past decade working with corporations as well as investors to help them make informed decisions about ESG investing.
To aid investors in making wise decisions and supporting the right companies I have three main pieces of advice:
First, depending on the investor’s ESG goals and objectives, a solid, credible place to start is the ImpactAssets 50 list.
This is a list of the top 50 impact investment fund managers in the world.
These are reputable impact investment managers with an extensive portfolio of investments across climate, renewable energy, agriculture, water access and sanitation, global health, and education to name a few.
They also represent a meaningful opportunity for ESG investors to proactively invest in ways that meet their objectives and generate a tangible impact worldwide.
Second, take a look at emerging market business leaders, especially women, whose companies are disrupting industries in ways that create value across all of ESG, and provide access to quality, affordable, key services to consumers bypassed by traditional companies.
Third, deeply analyse the data you are given on ESG investment opportunities.
This includes looking at the leadership team of the companies they are considering investing in. How diverse are they?
Look at how the company is structured and what expertise it has on-board to execute on the ESG goals it has advertised. Look past buzzwords and trends.
The reality is that greenwashing can manifest itself in many ways, so the key is to question the data, ask for supporting documentation, and carry out your own analysis.
Alix Lebec is chief executive and founder of Lebec Consulting