Funds Management News

‘Green washing’ rife as investors jump on the ESG bandwagon

Posted by Anton Murray Consulting on . Posted in Funds Management News


The Australian Council of Superannuation Investor’s threat to vote against the re-election of directors of companies that don’t respond adequately to climate-related risks is another strand in a global and accelerating trend towards fund manager activism on environmental, social and governance issues. While ACSI’s track record on activism is fairly solid – its predominantly industry fund base has tended to put its money where its mouth is – that’s not necessarily, however, the case for all funds that have joined the scramble in recent years to label themselves as ethical investors. Indeed, there is considerable “green washing” occurring as fund managers try to exploit the flood of investor money into ESG-labelled funds, particularly those that portray themselves as active on climate change-related issues.

The pace of that flow of funds into sustainable investing has accelerated sharply since 2019. In the US last year an estimated $US51 billion ($65.5 billion) flowed into ESG funds, twice the level of 2019. Globally the sustainable investment industry is now thought to manage more than $US3 trillion of funds. The fund managers are being drawn to sustainable investing because the increased interest of investors in investing with a social conscience means that’s where the money and the management fees are heading.

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