Login
HomeOur IndustryThe BVCA and ESGExcellence in ESGCutting through the maelstrom

'Greenwashing’ - cutting through the maelstrom

On ‘Greenwashing’. Let’s cut through the maelstrom and reward companies and investors alert to the business risks of tomorrow.

If you flick through the FT’s pink pages today, you are almost bound to find an article on ESG. I would lay money on that article referring to the evil of ‘greenwashing’ – trumping up your own green reputation without being able to back that up with substantive action.

Greenwashing is not new. For as long as I have worked in the investment industry, it has been all too easy to find examples of company sustainability reporting that is not authentic and is not relevant to an investor’s core mission. But we have also seen great progress in this time. The ESG world of today is unrecognisably different to ten years ago.

If investors are free to opt out of investing in a greenwashing company, is greenwashing such a big deal?

On the one hand it is. If companies and investors routinely indulge in greenwashing, other parts of the financial ecosystem might become confident that we have solved some particular sustainability challenge. Policy makers might become complacent about the likelihood of net zero by 2050. If greenwashing goes too far, companies and investors could lose the trust of their most important stakeholders, and this has the potential to undermine economic progress. This argument - albeit in a public markets context - is central to John Kay’s decade-old Review.

On the other hand, there are misplaced accusations. It is tiresome reading articles that attack ESG when in fact they are attacking something else, like ethical investment, or impact investment. ESG is about managing material business risks, insofar as they relate to a firm’s governance or sustainability. It is not about promoting a particular ethical view, and it is different to investing for impact. From an investment standpoint, it is hard to argue against the case for well-governed companies that attend to their long-term sustainability. That is what good ESG analysis seeks to understand.

What can be done to curb greenwashing while at the same time enabling enlightened investors to assess the business risks of tomorrow? One answer is something people won’t like: regulated disclosure. But the trick here is smarter regulation, not more regulation. We need reporting requirements that limit duplication, are globally inter-operable, are actually used by investors, that (like SASB/ ISSB) home in on significant business risks, are verifiable, are comparable within a sector, and are immune to greenwash. That enables rigorous investment analysis, factoring all drivers of enterprise value (or portfolio value) whether they have a sustainability flavour or not. As managers of other people’s money, what is not to like?

The BVCA’s Excellence in ESG Awards rewards companies and investors making meaningful strides in integrating ESG into the way they create value. It has been a pleasure to serve as a judge on the awards panel over the past few years. Last year we saw some great examples of ESG practice in the UK private equity sector. So much so it becomes trickier with each passing year to pick a winner. We’ve added a fourth category to this year’s awards to encourage smaller firms to submit and refined the objective judging criteria. The deadline for submissions closes on 19 August, we look forward to reading your proposals.



Excellence ESG in association with


"If greenwashing goes too far, companies and investors could lose the trust of their most important stakeholders, and this has the potential to undermine economic progress."


Authored by Michael Marshall
Head of Sustainable Ownership, Railpen, and Judge, BVCA Excellence in ESG 2022

Back to Excellence in ESG