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Tariq Fancy, former BlackRock chief investment officer for sustainableinvesting, in a recent TEDx talk called fossil fuel divestment a placebo, equating it to giving wheatgrass juice to a cancer patient. These comments also show that there is a massive skills gap in the sustainableinvestment industry.
FCA-hosted TechSprint aims to harness technology innovation to outpace adverse impacts of greenwashing in financial services. At yesterday’s culmination of the Global Financial Innovation Network’s (GFIN) first Greenwashing TechSprint , awards were presented based on different criteria.
Under SFDR, Article 8 portfolios should promote “environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.” Article 9 portfolios should have “an objective of sustainableinvestments,” according to SFDR.
These long-held principles of sustainability have filtered down to the world of investment. According to figures published by The Global SustainableInvestment Alliance in 2021, Japan’s total sustainablyinvested assets stood at US$42,874 billion in 2020, representing a more than fivefold increase from 2016.
For years, the lack of consensus on the key principles defining an “SDG-aligned” or “sustainable” business has created confusion and enabled greenwashing. However, many existing frameworks, practices, and reporting standards are not fit to purpose.
Against a backdrop of inflation, supply chain issues and a rising cost-of-living, UK leaders are steadfast in their environmental commitments as they view sustainability action as a means to offset economic uncertainty.
In fact, almost 85 percent of individual investors say they are interested in sustainableinvesting and more than three quarters believe they can use their investments to influence the extent of climate change. Many people want their money to work for them—to preserve their financial security and to improve the world.
The next focused more deeply on the rising profile of social factors, driven partly by the development of the sustainableinvestment regulations and frameworks around the global. Similarly, the authors argued that the results achieved could be extrapolated to other sectors. Watch this space!
The impetus for net zero following the Paris COP came from the academic community, was endorsed and framed by policymakers, and requires business model change, often radical, to be implemented by corporates. “We have to acknowledge that with the transition to net zero, finance is an enabler not really the driver.”.
Difficulties in definition continue to thwart efforts to demonstrate the financial benefits of sustainableinvestments. Sustainable fund flows attracted US$37 billion of net new money in Q4 2022, with global sustainable fund assets reaching a total of US$2.5
It committed to a green and transition taxonomy (a classification system for investments) and mandatory climate-related disclosure from large private companies. It also proposed to tackle greenwashing by strengthening competition law. Climate finance policies like CAFA have support.
But experts are concerned the UK is lagging the EU, after HM Treasury said in its consultation response that the finalised rules will take up to four years to come into force. Grey area The exact scope of the UK’s regulatory regime is still yet to be wholly defined.
Segal argues that Canada’s policymakers and regulatory bodies have failed to align the country’s financial sector with a “safe climate and stable economy”, leaving little incentive for companies, financial institutions and asset owners to pursue sustainableinvestment strategies.
Peak pressure – Asset managers may not be our best hope for saving the planet, according to recent academic research. This at least will have the practical benefit of helping to put the era of greenwashing behind us. Their success, or otherwise, is expected to be one of the major future streams of study for the initiative.
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