“There should be a bit more rigor around the analysis of social now,” said Mangone. ‘’If you think about the heavy emphasis on risk and disclosure around climate, we’re nowhere near that on the social side.”
The rapid growth of ESG funds -- more than $30 trillion is now managed in accordance with ESG principles -- has created an opportunity for chancers and swindlers.
‘Bluewashing’ to ‘Pinkwashing’
While greenwashing may be the best known con, ESG investors face a litany of other risks. There’s also “bluewashing” (using a United Nations affiliation to confer underdeserved sustainability credentials), “pinkwashing” (for false LGBTQ claims) and “rainbow washing” (to reflect inappropriate use of the UN’s sustainable development goals logo), according to Steve Waygood, chief responsible investment officer at Aviva Investors in London.
“It’s easy to make not much sound like a great deal because measuring performance in this area is very hard,” Waygood said. “We’ve got an entire industry for measuring alpha and excess returns, but there’s no clear framework for demonstrating positive impact on human rights or labor rights.”
--With assistance from Emily Chasan and Akshat Rathi.
This article was provided by Bloomberg News.