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Greenwashing is rife and Australia’s impact reporting is woeful

according to Paul Ronalds, as reported in The Canberra Times

The Canberra Times, 27 July 2023.

Greenwashing by distorting relevant information to a current or prospective investor is eroding investor confidence in the market for sustainability-related products and poses a threat to a fair and efficient financial system.

A recent report by the ACCC found 57% of businesses raised concerns with their claims to be sustainable.

The move by the corporate regulator to take investment giant Vanguard to court over failings in its ethically conscious bond index fund provides the opportunity to put the spotlight on “greenwashing“.

ASIC defines greenwashing as “the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical.” Frankly, the level of impact investment reporting in Australia is woeful and if ASIC put its mind to it there would be many other funds in hot water.

When Save the Children launched the first impact investment fund run by an aid organisation in Australia, almost three years ago now, I was challenged by a funds manager. He asked: What would Save the Children know about impact investing?

The reality is that there are two sides to impact investing. The first is: How do you generate and measure impact? The second challenge is: How do you calculate and deliver a financial return?

Given the wicked global problems that impact investing looks to tackle – such as seeking to mitigate the catastrophic impact we are having on the planet’s climate or seeking to tackle global poverty or chronic diseases killing people in some of the world’s poorest countries – I would argue it is this first question that is far harder to answer.

And that is the area Save the Children has been working in for almost 100 years.