ESG investing is rife with greenwashing, and regulators are eyeing ever-bigger targets.
Regulators in the US and Europe are cracking down on greenwashing by financial firms, and on June 10 targeted their biggest potential perpetrator to date: Goldman Sachs.
In response to investor interest in climate-friendly products, banks and asset managers have been racing to slap “ESG” labels on their offerings, which ostensibly indicate an investment fund is composed of shares in companies with strong environmental, social, and governance credentials. But the absence of regulations around these labels means that firms like S&P and MSCI established their own ratings, using murky and sometimes dubious methodologies. As a result, many “ESG” funds still hold major emitters like ExxonMobil, and are only marginally less carbon-intensive than the market average.
The SEC is going after greenwashing by banks
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