A survey conducted by Quilter, the British wealth management department of Morgan Stanley, on 20021showed that "green washing" was the most concerned issue for responsible investors, and 44% people were worried that ESG investment was not what they claimed. Another study by Close Brothers shows that only a quarter of investors are convinced that they know what "washing green" means; The rest are either uncertain or unheard of.
"Green washing" means that a company, a government or an organization declares its contribution to environmental protection by some behavior or action, but in fact it is the opposite, which is a false environmental protection phenomenon. Later, the financial sector began to appear "green washing" behavior. One of the most famous examples of green cleaning is Volkswagen. In 20 15, the Environmental Protection Agency (EPA) of the United States found that this famous German enterprise installed "fault devices" on 1, 1 10,000 diesel vehicles around the world, which made the emission of nitrogen oxides seem to meet the standard. In fact, its emissions exceed the American standard limit by 40 times. Therefore, Volkswagen suffered great reputation damage and lost the trust of customers. The then CEO was accused of fraud and conspiracy. In addition, the company was ordered to pay a criminal fine of $2.8 billion by a federal judge, and its share price plummeted by more than 30% in a few weeks.
A report issued by Fitch explained the risk of "green washing" in China: "According to the data of Climate Bond Initiative, the total amount of labeled green bonds in China in 2020 is about $654.38+03.9 billion. However, only 48% of green bonds meet the definition of green bonds in China, while the definition of green bonds in China is different from the recognized international standards. This shows that these bonds may not meet international green standards, which makes people mistakenly think that the relevant raised funds are used for environmental protection projects. "
In order to avoid "green washing", investors must carefully and thoroughly evaluate the investment focus, selection criteria and evaluation methods before investing.
However, due to the lack of high-quality research, it is difficult for investors to make an informed decision on the environmental quality of related assets. In addition, one of the main obstacles to determining "green cleaning" is the lack of standardized standards for the composition of green investment.
Evaluation criteria vary from enterprise to enterprise.
For example, the key criteria for banks are who they lend to and how free their lending policies are. If a bank is willing to provide loans to enterprises and organizations that damage the environment easily, then it may not be a responsible investment bank. In order to avoid this situation, Triodos bank in Europe published the detailed information of each organization it funded on its website, so that the public could evaluate the strength of its green certificate.
How do investors audit the environmental risks of companies that operate highly polluting industries (such as oil exploration)? Companies with strict policies and procedures in inspection, investigation and environmental monitoring should be favored by investors.
1. Make a questionable statement about the positive impact of its business-for example, just say that bicycle manufacturers have a positive impact on the environment, but don't say that the carbon emissions of their products are lower than those of other modes of transportation.
2. Provide vague information-for example, they just claim that their products are responsible, sustainable or ethical, but they don't provide any details about why.
You know, even if the company's products are made of recyclable materials or substitutes for traditional materials, its supply chain may still have a significant impact on the environment. In other words, without a perfect company, investors must know what they can accept and what the bottom line is.
Nowadays, one of the most important issues of ESG is shareholder participation. As part owners of an enterprise, shareholders can have a dialogue with the management to encourage behavior changes and solve serious environmental problems, as an alternative way to formally vote on shareholders' resolutions. In order to promote the positive transformation of enterprises in ESG, shareholders must participate in meaningful and relevant proposals-for example, for oil producers who cause damage to the environment, discussing their carbon emissions is more meaningful and relevant than employee satisfaction.
Also remember that change takes time and management by objectives. Setting short-term goals and milestones and regularly monitoring the progress of achieving these goals can help enterprises or institutions achieve long-term goals. Having said that, sustainable management can be regarded as a form of "washing green". Therefore, in order to make participation effective, investors may need to be prepared to withdraw their funds if the enterprise refuses to respond appropriately.
Managing climate-related risks and supporting the transition to a low-carbon world are the most important global challenges we face. Achieving these goals requires the joint efforts of global institutions, governments and financial services departments, and sustainability and management need to be the core of finance. Britain is the birthplace of global green finance education. As one of the founding members of the British Green Finance Education Charter, CISI plays a key role in formulating and embedding professional knowledge, technology, market standards and norms in the widest field of British financial services. CISI widely supports the financial services industry to better identify risks and seize opportunities with the government and enterprises by providing individual members, corporate members and global candidates with a series of professional learning contents, such as green finance professional training modules, sustainable and responsible investment professional tests, sustainable and green finance qualification certificates and climate risk certificates, and * * * keeps moving towards a low-carbon and sustainable society.