Peeling off the greenwashing label (The Business Times)

Sustainable assets in Asia hit new highs in the second quarter of this year, a testament that environmental, social, and governance (ESG) investments are still on-trend.

Total assets invested in Asia-domiciled funds stood at a record US$36.3 billion at the end of June, up 3.3 per cent from the last quarter, Morningstar data from July showed.

That said, quarterly flows slowed with fewer new fund launches. The breather gives investors a chance, perhaps, to look more closely at what they are putting money into.

One material risk behind the rising number of ESG funds is greenwashing, which Fidelity calls giving investments a “green sheen”. The risk here is that financial players are adding an ESG label to investments simply because the theme is in vogue.

John Ng, head of funds selection and advisory, DBS Private Bank, defines greenwashing as a misrepresentation that tries to capitalise on the increasing interest in sustainable products or services.

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The Business Times

11 August 2021

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