Invest
ESG is becoming popular but ‘greenwashing’ is a problem
Sustainable investing is back on the radar as a result of the COVID-19 pandemic, but experts warn that better standards around ESG products are needed to mitigate “greenwashing”.
ESG is becoming popular but ‘greenwashing’ is a problem
Sustainable investing is back on the radar as a result of the COVID-19 pandemic, but experts warn that better standards around ESG products are needed to mitigate “greenwashing”.
Environmental, social and/or governance (ESG) factors are now top of mind for investors, with the COVID-19 crisis impacting the way investors view social responsibility and sustainable living.
According to new study survey by CFA Institute, the global association of investment management professionals, 85 per cent of CFA Institute members now take ESG factors into account when investing, up from 73 per cent just three years ago.
Although only 19 per cent of institutional investors and 10 per cent of retail investors currently invest in products with ESG factors, 76 per cent of institutions and 69 per cent of retail investors said they have interest in ESG investing. In Australia, interest is a little lower and sits at 65 per cent.
“Incorporating sustainability in investment management has become part of our industry’s mission to serve society by improving long-term outcomes,” said Margaret Franklin, CFA, president and CEO of CFA Institute.
“This moment represents a valuable opportunity for organisations to address this challenge and help shape a future worth investing in. As the focus on sustainability in investing gathers momentum, it will eventually dictate the sustainability of investing itself.”
However, while investors are flocking to social media and the more non-traditional sources of information to learn more about sustainable investing, an overwhelming 78 per cent of the surveyed respondents believe there is a need to improve standards around ESG products to mitigate “greenwashing” and boost transparency about “green” claims.
Looking at the reasons for incorporating ESG in investment decision, Ms Franklin explained that they vary.
For asset managers, client and investor demand is one of the biggest factors (for 59 per cent of firms), as well as the need to manage investment risks (for 64 per cent of firms). Just 35 per cent consider ESG to improve financial returns, despite the outperformance of ESG indexes during the COVID crisis.
“For many years, sustainable investing could be characterised as ‘a slow-moving but unstoppable train’, but this year’s events have accelerated it.
“With the COVID-19 pandemic, the health and safety of various communities has become a larger consideration. In addition, unrest over racial inequality in the US increased focus on social responsibility,” said Lisa Carroll, CEO of CFA Societies Australia.
In addition to these findings, the report found that 90 per cent of investment professionals expect that their firm’s commitment to ESG research will increase, up from 72 per cent just two years ago, which has led to a shortage of investment professions with ESG expertise.
RELATED ARTICLES
About the author
About the author
Investment insights
Beyond the trophy: What the Women in Finance Awards 2025 signal for strategy, talent and ROI
Australia’s Women in Finance Awards have crowned their 2025 cohort, but the real story isn’t the stage—it’s the strategy. Recognition programs now function as market barometers, signalling which ...Read more
Investment insights
Orbis Investments challenges investors to rethink assumptions in 2026
In a bold move to reshape investor perspectives, Orbis Investments has released a new report titled "Six Courageous Questions for 2026," encouraging investors to critically evaluate their assumptions ...Read more
Investment insights
Rate relief on the horizon? How a November cut could reshape Australian balance sheets
With unemployment edging up to a multi-year high, markets are weighing whether the Reserve Bank will pivot to a rate cut as early as November. For CFOs and CEOs, the real question isn’t if a cut ...Read more
Investment insights
J.P. Morgan unveils insights from the world's wealthiest families in 2025 report
In a world increasingly defined by rapid technological advancements and global uncertainties, J.P. Morgan has released its 2025 Principal Discussions Report, offering a unique glimpse into the minds ...Read more
Investment insights
RBA keeps the playbook open: how to navigate an “anything-can-happen” rate path
The Reserve Bank has kept its options open on interest rates, signalling neither cuts nor hikes are off the table. For boards and CFOs, that ambiguity is not a bug — it’s the game. With the cash rate ...Read more
Investment insights
Hotter CPI, cooler cuts: What the RBA pause means for balance sheets, pricing and 2025 strategy
A surprise upside in quarterly inflation has shifted the Reserve Bank of Australia’s calculus: a cut now looks less likely, and a prolonged plateau in rates more probable. For CFOs, that changes the ...Read more
Investment insights
Gold demand hits record highs as investors seek refuge from market volatility
Global gold demand surged to record levels in the September quarter as investors sought safety amid volatile markets and growing geopolitical uncertainty, according to the World Gold Council’s Q3 2025 ...Read more
Investment insights
Global deal activity dips 4% amid cautious investor sentiment: GlobalData
Global deal activity has declined by 4 per cent year-on-year during the first three quarters of 2025 as deal-making slowed across regions and sectors, according to data and analytics firm GlobalDataRead more
Investment insights
Beyond the trophy: What the Women in Finance Awards 2025 signal for strategy, talent and ROI
Australia’s Women in Finance Awards have crowned their 2025 cohort, but the real story isn’t the stage—it’s the strategy. Recognition programs now function as market barometers, signalling which ...Read more
Investment insights
Orbis Investments challenges investors to rethink assumptions in 2026
In a bold move to reshape investor perspectives, Orbis Investments has released a new report titled "Six Courageous Questions for 2026," encouraging investors to critically evaluate their assumptions ...Read more
Investment insights
Rate relief on the horizon? How a November cut could reshape Australian balance sheets
With unemployment edging up to a multi-year high, markets are weighing whether the Reserve Bank will pivot to a rate cut as early as November. For CFOs and CEOs, the real question isn’t if a cut ...Read more
Investment insights
J.P. Morgan unveils insights from the world's wealthiest families in 2025 report
In a world increasingly defined by rapid technological advancements and global uncertainties, J.P. Morgan has released its 2025 Principal Discussions Report, offering a unique glimpse into the minds ...Read more
Investment insights
RBA keeps the playbook open: how to navigate an “anything-can-happen” rate path
The Reserve Bank has kept its options open on interest rates, signalling neither cuts nor hikes are off the table. For boards and CFOs, that ambiguity is not a bug — it’s the game. With the cash rate ...Read more
Investment insights
Hotter CPI, cooler cuts: What the RBA pause means for balance sheets, pricing and 2025 strategy
A surprise upside in quarterly inflation has shifted the Reserve Bank of Australia’s calculus: a cut now looks less likely, and a prolonged plateau in rates more probable. For CFOs, that changes the ...Read more
Investment insights
Gold demand hits record highs as investors seek refuge from market volatility
Global gold demand surged to record levels in the September quarter as investors sought safety amid volatile markets and growing geopolitical uncertainty, according to the World Gold Council’s Q3 2025 ...Read more
Investment insights
Global deal activity dips 4% amid cautious investor sentiment: GlobalData
Global deal activity has declined by 4 per cent year-on-year during the first three quarters of 2025 as deal-making slowed across regions and sectors, according to data and analytics firm GlobalDataRead more
