Last week, an opinion letter from Tariq Fancy, former chief investment officer of sustainable investing at BlackRock, claimed sustainable investing practices to be a public relations spin and highlighted greenwashing as an impediment to addressing the risks of climate change. As a pioneer in impact and ESG investing, CCM agrees that more scrutiny, transparency, and standardization in the field is necessary and that pretending to do good can lead to a false sense of security. What the letter fails to mention, however, is the success of well-intentioned investors in facilitating the flow of capital toward this environmental cause.
According to the letter, there seem to be instances of greenwashing either across the mutual fund industry where fund managers’ claims of “green” are inconsistent with their goals, or instances of companies issuing green bonds solely for the sake of appearances and marketing. Although this may be true in some cases, we argue that there is plenty of good and intentional work being done to fight climate change. No differently than other aspects of the due diligence process, it is ultimately up to the investor, adviser, and/or consultant to verify the validity of a fund manager and its’ company’s claims. Similarly, impact and ESG managers must be diligent and vigilant in their examinations of securities in their portfolios. As an investor of our clients’ capital, we are committed to verifying the intended environmental outcome of a security prior to purchasing, and then also monitoring the results to ensure bond issuers are keeping to their impact commitments. To help our clients verify the validity of our claims, we share our findings through detailed impact reporting.
While the letter pointed to uncomfortable facts and premises, we are not discouraged. We are hopeful that some recent initiatives will help provide more clarity, greater insight, and transparency into impact and ESG investing practices. These include the SEC’s announcement of a Climate and ESG Task Force in the Division of Enforcement, the SEC’s appointment of Satyam Khanna as Senior Policy Advisor for Climate and ESG, and the PRI’s new Reporting Framework to drive positive change in responsible investment. We believe that by standardizing practices and reporting across the financial industry, it will highlight the well-intentioned investment managers that are currently making an impact through their investments, including the fight against climate change.
If you have any questions, please do not hesitate to reach out.