Written on 18 Oct 2021.
For several years the financial industry has increasingly taken initiatives to measure companies' climate performance and commitment to tackling climate change. Scarcely a day goes by without a new fund or index being launched on the basis of this climate data, with the primary declared objective being the investments' positive impact on the transition towards a low-carbon economy.
However, the recent study "Doing Good or Feeling Good? Detecting Greenwashing in Climate Investing", conducted as part of the EDHEC–Scientific Beta Advanced ESG and Climate Investing research chair, shows that the reality of traditional climate investing strategies does not live up to the promises and communication from their promoters. Speaking of climate investment when the companies' climate performance only accounts on average for 12% of the weight of their stocks in the portfolios is at best a misnomer and at worst misinformation with regard to responsible investors committed to addressing climate issues.
This greenwashing also has negative consequences for the potential impact of investment strategies on combatting climate change.
On 21 September, during a webinar that saw participation by over 1,500 professionals, Noël Amenc, Associate Professor of Finance at EDHEC Business School, CEO of Scientific Beta, and Felix Goltz, a Member of the EDHEC–Scientific Beta Advanced ESG and Climate Investing research chair, presented the main results of the study on greenwashing in portfolio construction, which shed light on the greenwashing risks of traditional climate investing strategies, and promoted new practices.
Everyone is talking about it – but what is actually behind the big buzzword "Sustainability"? January 2020 kicked off what environmentalists are referring to as the "Decade of Action". In concrete terms, this means that we have just 10 more years to meet the goals set out in the UN's Agenda for Sustainable Development to limit global warming to 1.5 degrees Celsius above pre-industrial levels by 2030. Against the backdrop of this development, prioritizing sustainable action is not only of ever-increasing importance, but at the same time creates new opportunities in the development of new markets and technologies.
On 23 September, Gianfranco Gianfrate, Professor of Finance at EDHEC-Risk Institute, participated in a plenary session, together with Stéphanie Hubold, Head of ESG at Altor Equity Partners, Leoni Gros, part of the Innovation and Strategy team at Berlin Hyp, and René Rohrbeck, Professor of Strategy and Director of the Foresight, Innovation and Transformation chair at EDHEC Business School.
Hosted by ITONICS, Rohrbeck Heger and the EDHEC Foresight, Innovation and Transformation chair, the summit centred around emerging trends and technologies, as well as new action ethics that we will inevitably have to confront in the context of shaping a more sustainable future.
The session entitled "EU Green Deal & ESG" examined the following topics:
On 4 October, Gianfranco Gianfrate, Professor of Finance at EDHEC Business School and the Climate Change & Sustainable Finance Lead Expert at EDHEC-Risk Institute, participated in a plenary session, together with Gabriel Makhlouf, Governor of the Central Bank of Ireland, Alessandro d’Eri, Senior Policy Officer at ESMA, and Crystal Geng, Head of ESG at Ping An Group.
The Economist launched the Sustainability series of events in 2016 to foster dialogue between policymakers, business, scientists and investors around finding solutions to the problems of climate change, and wider sustainability issues. Of growing importance is the investment and finance part of the programme, both in terms of looking for opportunity for investors and scrutinising the claims of ESG investors.
The session entitled "How to Detect and Prevent Greenwashing" answered the following questions:
While sustainable investing has seen rapidly increasing popularity over the last couple of years, the “code red” report released this summer has added renewed urgency to this shift. Net-zero commitments may no longer be enough as professional investors are facing calls for a more stringent approach to achieve greater impact and asset managers must counter accusations of greenwashing.
As the findings of the report bed in and we approach COP26, the webinar explored how professional investors are interpreting and responding to these warnings.
On 28 October, Irene Monasterolo, Professor of Climate Finance at EDHEC-Risk Institute, was invited to participate in the debate together with Tommy Wilkes, Finance & Markets Correspondent at Reuters, Glen Yelton, Head of ESG Client Strategies at Invesco, Birgit Puck, Head of Securities Supervision at the Financial Market Authority (FMA), and Eléonore Bedel, Head of SRI & Impact Investing at, BNP Paribas Wealth Management.
The webinar entitled "Unpacking the UN IPCC Climate Report: Implications for professional investors" explored the following topics: