Contribution to the discussion on greenwashing in the financial sector.
Greenwashing has entered the investment industry lexicon with a vengeance in recent years. With the dramatic growth of ESG investing – at least until 2022/23 – it is perhaps not a surprise that many products do not (yet) meet the claims of investment providers. Financial organizations face the challenge of how to protect themselves against accusations of greenwashing, amidst increasing regulatory risk and potential financial and reputation-related consequences.
The current legislative focus seems to be fully aimed at transparency as a silver bullet solution. Shouldn’t policy action be more direct? And what about all the pledges and commitments that have been made by CEOs and boards? Shouldn’t there be a more constructive dialogue within investment firms about the road to a carbon-neutral economy and what choices and trade-offs need to be made to get there? Explore in our whitepaper the call-to-action items that reflect the most important issues that emerged in conversations with industry professional.
The Chartered Institute for Securities & Investment (CISI) and DSI Foundation warmly invite you to an upcoming webinar on March 28, where our guests speakers from DSI, EY and ACCA will join the lively conversation on greenwashing. The speakers will delve into the most important issues that emerged from conversations with industry professionals while researching the recent white paper from DSI on Greenwashing: Let’s be real!
Join the webinar
Download the whitepaper
This white paper is a result of multiple round tables that DSI organized together with EY over the course of 2023. It reflects the most important issues that emerged in conversations with industry professionals. These professionals are specialists in marketing, compliance and investing, and work at banks, pension funds and asset managers. They deal with the issues discussed on a daily basis and provide insights that could be overlooked by policymakers during the process of creating new rules for the financial sector.
This initial session brought together professionals in the fields of risk, legal, and compliance from various DSI participants.
During the second gathering, we discussed with specialists the marketing and communication challenges of greenwashing.
During the third meeting, investment professionals collectively discussed the challenges surrounding ESG investing and greenwashing.
The conversation about greenwashing should not only focus on regulations but also on ethics and integrity. Greenwashing fundamentally challenges the trust placed in the financial sector. DSI stands for a strong consumer trust in the investment industry. For this reason, we consider it important to continue the discussion about Greenwashing in the sector.
The rise of greenwashing in the investment industry, fueled by the strong growth in the offering of various ESG investments, raises serious questions about integrity and ethics within the financial sector. Financial organizations face the challenge of resisting accusations of greenwashing, amidst increasing regulatory risk and potential financial and reputation-related consequences. Discussions about greenwashing should not be limited to regulations; they touch the essence of trust in the financial sector and can lead to a misallocation of capital.
Investors’ expectations often differ from the actual results of sustainable investment products. This is exacerbated by complex terminology and communication issues within organizations. Although sustainable financial regulation emphasizes transparency, it currently does not provide clear solutions. Additionally, the abundance of ESG data increases the risk of goal obfuscation.
Tempering deliberate greenwashing and focusing on concrete objectives, rather than vague claims, are necessary for the industry and regulators. A common understanding of sustainability and strong standards within the industry are crucial for building trust. The whitepaper, resulting from roundtable discussions between DSI and EY, provides insight into these complex issues and advocates for an honest dialogue, better definitions, and thoughtful regulation rather than increased regulation.
With this whitepaper, DSI aims to actively contribute to the lively discussion on greenwashing. The recommendations can be heeded by both the financial sector, regulators, and legislators. DSI primarily focuses on professionalism and integrity in the financial sector, particularly in the investment industry. These two focal points are crucial for this topic. The document explicitly does not aim to tell a comprehensive story about greenwashing.
Would you like to learn more about this topic or would you like DSI to also engage in discussions about greenwashing within your organization? Please contact DSI via Floris Mreijen, Director, at 020-620 74 12 or through our contact form.