Greenwashing: when sustainable investing goes rogue

Corporate Social Responsibility (CSR) is initiated by companies to become socially accountable through their economic, social, and environmental impact. CSR has become a focus for marketeers who know that in terms of promoting a company, social responsibility offers high currency value. One unwelcome phenomenon to have evolved from the desire to be seen to be socially responsible, is “greenwashing”.

What is greenwashing?

The term “greenwashing” was coined as a nod to the more established and better-known term of whitewashing, where negative information is glossed over through a biased presentation of facts. 

Greenwashing is the deliberate promotion of misinformation about a company’s environmental impact to win favour with potential customers. Exaggerated claims are made that the company has higher environmentally friendly credentials than it really has. This could, for example, be related to the recycled properties of products, energy-saving benefits or use of transport.

How do companies go about greenwashing?

Companies engage in greenwashing by plugging misleading environmental claims in the likes of press releases, mission statements, websites, advertising and product descriptions. These are either found to be untrue, or true but happening alongside a host of non-environmental policies that prevent the company from claiming it is an ethical organisation focused on sustainability.

A high profile case of greenwashing happened in the 1980s when oil company Chevron claimed it was an environmentally-friendly organisation, but in reality it was violating the Clean Air and Clean Water acts, while depositing oil into wildlife shelters.

Some companies can fall into greenwashing by accident as they don’t have the expertise to know what is truly environmentally beneficial, and what is not. Companies should research their claims thoroughly to avoid this happening.

Greenwashing and its effect on investments

There is a growing concern in the financial sector about the escalation of companies wanting to benefit from the move toward sustainable investment. An increasing number of firms are marketing products and investments in a way that makes them seem more sustainable and ethical than they really are.

The Financial Conduct Authority (FCA) now challenges firms that are greenwashing financial products to protect consumers from being misled over the sustainability of their investments. Funds must clarify to investors if and how they pursue environmental and social objectives, and to do so in a way that is not misleading. 

Any difficulty in validating claims about products on offer will put those products at risk of greenwashing, which could undermine confidence in the green sector. The FCA’s concern is that this could lead to unsatisfied demand and reduced investment in sustainable investments.

Positive Pennine lead the way in sustainable investing

All funds offered by Positive Pennine are from sustainable investment portfolios. Each fund is subjected to a rigorous assessment that confirms their suitability for sustainable investing, in line with the United Nations’ 17 Sustainable Development Goals.

Positive Pennine have a community of trained and approved Financial Advisers across the North West, who understand sustainable investing. If you would like to be put in touch with an approved adviser to feel assured about investing in sustainable products, visit our website:

Positive Pennine is a trading style of Pennine Wealth Solutions LLP, which is authorised and regulated by the Financial Conduct Authority and is only available through authorised Financial Advisers.

Investors should remember that the value of investments, and income from them, can go down as well as up. Investors may not recover what they invest. Past performance is no guarantee future results. Any mention of specific securities should not be interpreted as a solicitation to buy or sell specific securities.