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Fund manager calls out 'greenwashing' in investment sector

A fund manager is calling out what it calls the growing issue of greenwashing in the investment sector.

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Greenwashing is a form of marketing spin that gives consumers an impression that products are ethical or environmentally friendly.

AMP Wealth Management New Zealand, which has the most independently certified sustainable investment funds in the country, said a broader conversation needs to happen about the issue.

Its chief executive Blair Vernon said firms could walk the talk by actively screening investment data collected by their third party partners.

"For the AMP funds that have achieved the RIAA [Responsible Investment Association Australasia] certification on, that's a constant process of monitoring and surveillance that we run with our index investment manager Black Rock," Vernon said.

"We also in our funds offer schemes from other third party managers ... we also for those managers are seeking the same kind of transparency around exactly where they are invested in."

AMP also challenged what it called a misconception about index funds, which follows financial market indexes and generally get a bad reputation from advocates of ethical investment.

"The suggestion that your fund simply tracks the index and [you have] nothing to do about it I don't think washes in the current environment.

"[Our approach is] we're going to use Black Rock as our index manager but we've been very specific and very clear in our design in conjunction with Black Rock ... of the screening specific to AMP that eliminates companies and investments that don't meet our ESG [environmental, social and governance] criteria," Vernon said.

Responsible Investment Association chief executive Simon O'Connor said greenwashing is getting worse and has caught the eye of market watchdogs.

"There's really a bit of a global move from regulators to stamp these out right now and I guess the risk here is that consumers will end up investing in products that don't really deliver what [they're] expecting, when they're expecting to invest in a sustainable or ethical fund," he said.

O'Connor said consumers were increasingly looking for ethical options when investing their money.

"What's really important is there is truth in the labelling and truth in the explanations around the investment product that matches what a client is going to expect to see in that investment product," he said.

source: https://www.rnz.co.nz/news/business/465072/fund-manager-calls-out-greenwashing-in-investment-sector