reenwashing refers to the deception of consumers: a product or service is presented as ecological or sustainable, but in reality it is not. After years in which so-called sustainable investment products have provided the financial industry with high growth and profit rates, the accusation of greenwashing has now hit with full force.
Critical minds are increasingly scrutinising the funds sold as green. People want to know how the eco-social claim of a fund is actually realised. In many cases, embarrassments come to light. One equity fund that declared itself to be sustainable only subjected 51% of its shares to the relevant criteria; the remaining shares were "added for stabilisation" without being checked. A German fund company offered an online "impact calculator" that showed precisely how muchCO2 or how many tonnes of waste were saved per amount of money invested in its funds. The small print then stated that the calculations were based on rough estimates and that there was no evidence of the corresponding effects. Another fund company fired its newly appointed head of sustainability during her probationary period because she criticised the superficiality of its own green products. The dismissed woman defended herself and triggered a court case.
Such excesses have startled a previously rather gullible public and prompted the authorities in various countries to bring order to the sustainability jungle. This will lead to a regulatory push, which is already noticeable in the EU, where every sustainable fund now has to disclose its approach. The pressure will also increase in Switzerland. Even if more regulation means more work and hassle, the development is welcome: it will bring the sometimes overly shrill claims back down to earth. Anyone calling for "green" must explain what is meant by this and how to act accordingly.
In the sustainability boom of recent years, a certain laziness of thought has taken root and errors have not only been concealed, but actively encouraged. The fact is:
- Investing in green equities will not save the world. This is what certain sales brochures suggest. Conscious investment decisions can contribute to positive change, but we should never forget that the interrelationships and causalities are complex.
- If all Western investors sell their oil shares, not a tonne ofCO2 will be saved. Rather, the falling share price makes the shares more attractive to investors who have no sustainable intentions.
- If more than 50% of investment funds in Switzerland now invest "sustainably", this does not mean that the world has become a better place, but rather that the criteria for sustainability have been watered down too much.
Invethos has emphasised the combination of investments and ethics since it was founded. Nomen est omen. On the one hand, we work with the ESG methodology, according to which a company is assessed in three dimensions - environmental, social and governance. However, we are able to scrutinise the ESG ratings and think for ourselves. If a company is rated poorly simply because it is too small to produce a long sustainability report, we apply our own judgement. Conversely, if a company receives a great rating because it emits littleCO2 but at the same time treats its employees badly, we remain critical. The ESG approach is going in a good direction, but it needs to be understood and developed further. We'll keep at it. In addition, impact investments are and will remain important to us: investments that specifically work towards a positive social and ecological impact. In view of the bursting green bubble, innovation and hard work are the order of the day, not cynicism and malice.
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