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Managers decry 'cuppa soup' ESG fund pretenders

Four specialist ESG and SRI fund managers gathered in the Citywire studio to debate the misleading claims made by some managers when it comes to a fund's green credentials.

The phrase ‘ESG’ (standing for environment, social and governance) seems to have burst forth this year with a slew of publicity around how fund management is, apparently, going green.

A number of new funds using the term ESG, sustainable or ethical in their title have been launched this year, including some existing funds which have changed their names and, so it seems, their investment approach.

But several such funds fall short of delivering the ethical or sustainability outcomes their investors might expect. In other words: talking the talk but not walking the walk. The name given to this is ‘green washing’.

This was one of the issues discussed in the Citywire studio by a panel of ESG specialist fund managers.

Around the table were:

  • Kristeen Morrison, co-portfolio manager, Impax Global Opportunities Strategy fund, Impax;
  • David Czupryna, senior client portfolio manager SRI, Candriam;
  • Sarah Norris, co-manger, global equity impact fun, Standard Life Aberdeen;
  • Neville White, head of SRI policy at Eden Tree Investment Management

‘I call these cuppa soup products,’ said White  ‘you take a basic equity product, add boiling water and bang you’ve got a sustainability product.’

He said advisers must drill down deeper into what a fund actually does.

Many funds claim ESG credentials because they adhere to the UN’s 17 Sustainability Goals or ‘SDGs’.

These goals are easy to understand and are often represented in a series of coloured squares.

But using SDG’s as marketing tool got short shrift from the managers.

‘I think that’s actually worse than greenwashing, its rainbow washing,’ said Morrisson.

White said the tools for investors to map SDGs were ‘not fit for purpose’. ‘These are built for governments, not for investment and there is no alignment.’

Watch the full debate about greenwashing, and rainbow washing, in our exclusive video, above.

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