Difference between revisions of "Greenwashing"
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== Examples == | == Examples == | ||
* ESG Funds falsely portraying themselves as adhering to an [[ESG Investing]] (or voting) strategy to attract investor money | * ESG Funds falsely portraying themselves as adhering to an [[ESG Investing]] (or voting) strategy to attract investor money | ||
+ | |||
+ | == Mitigation == | ||
+ | * provision of rigorous and standardised ESG information | ||
==See also== | ==See also== |
Revision as of 13:27, 13 October 2021
Definition
Greenwashing in the context of Sustainable Finance is any form of marketing or other communication / disclosure that uses deceptive means to persuade investors, regulators or the public that an organization's products, aims and policies or financial instruments are environment friendly. The term greenwashing was coined by New York environmentalist Jay Westervelt in a 1986 essay.
The rise of greenwashing coincides with increased awareness of sustainability challenges, paired with ineffective regulation and/or definition of what is "green". Greenwashing in the financial sector is a subset of more general greenwashing by corporate entities involved in the production of goods or services with a significant environment footprint.
Mechanisms
- Complex corporate structures and/or Financial Products that structurally hide "brown" activities
- Marketing that exploits known psychological blind spots of individuals (evocative language, suggestive imagery, mental associations etc.)
- In reporting / disclosures, missing or misleading factual information which may take various forms depending on context:
- Hidden Trade-offs. (See Also Do No Significant Harm Principle)
- Lack of Proof / Vagueness. Claims that cannot be substantiated and/or are poorly defined
- Exaggeration of factually correct claims
Examples
- ESG Funds falsely portraying themselves as adhering to an ESG Investing (or voting) strategy to attract investor money
Mitigation
- provision of rigorous and standardised ESG information