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The fine line between 'greenwashing' and sustainable investing

Trinity Chua
Trinity Chua • 2 min read
The fine line between 'greenwashing' and sustainable investing
SINGAPORE (Dec 28): With sustainable investing expected to see greater interest from investors, particularly with the introduction of more products, the next few years are crucial for the sector not to slip into what observers term “greenwashing”.
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SINGAPORE (Dec 28): With sustainable investing expected to see greater interest from investors, particularly with the introduction of more products, the next few years are crucial for the sector not to slip into what observers term “greenwashing”.

This means fund managers and businesses may advocate ESG or impact goals, but do not follow through with them or measure them.

The industry is particularly susceptible to this because there are no universal definitions of sustainable investing.

While investors are demanding greater ESG standards, lackluster leadership of governments in frontier markets can be a hurdle to the sector’s growth. It is also incredibly expensive and resource-intensive to measure the long-term impact of sustainable investments.

Essentially, as sustainable investing sees greater interest from investors, there will be more investment products in this field, and these products are likely to be more sophisticated than simple exclusionary screening strategies.

But with no firm definitions and measurement, it will become even harder for fund managers to hold companies accountable in producing measurable social and environmental impact.

What are government bodies doing to mitigate this, and how would greenwashing become a bigger problem as sustainable investing continues to pick up momentum?

Log in to read the full story Sustainable investing to pick up pace, but greenwashing may be a problem amid lack of global standards, which is in our latest issue of The Edge Singapore (week of Dec 31), available in print at newsstands today.

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