Lucy O'Boyle • Impact investing • 3 min read
In the last decade, consumers have increasingly called for businesses to take responsibility for their environmental footprint. The result? Some businesses have tried to draw consumer attention towards their ‘positive’ actions and away from the fundamentally harmful parts of their operations.
Greenwashing is an attempt by businesses to appear that they are doing more to protect the environment than they really are. Some of the worst greenwashing cases *looking at you Volkswagen* have involved outright deceit, while others simply use marketing to trumpet their green credentials while sweeping harmful activities under the carpet.
Well, from your ISA to your Pension, you may find that you are inadvertently invested in one of these businesses… you may even bank with them. Let’s look at 5 examples of greenwashing from the last decade.
It’s no secret that some of the largest banks in the UK are involved in financing companies that actively contribute to the climate crisis.
These banks have sought to clean up their reputations, whilst continuing to fund businesses linked to deforestation and fossil fuels.
In October 2022, HSBC’s adverts were banned by the Advertising Standards Agency (ASA) for making misleading claims about HSBC’s positive environmental impact.
The bus stop ads appeared in the lead-up to COP26 in 2021 with one of the ads highlighting HSBC’s aim to provide $1 trillion in investment to help in the transition to net zero (Guardian).
The ASA received 45 complaints about the ads and responded that they were misleading consumers when the business was also making “significant contributions to carbon dioxide and other greenhouse gas emissions” (FT advisor).
As the second largest retailer in the world, the business decisions made by H&M will have a meaningful effect on global waste and the working conditions of thousands of people.
For H&M, fast fashion has been a profitable but environmentally catastrophic business model — the company produces 3 billion garments a year (Earth).
Since 2011, the retailer has tried to align itself with more sustainable practices, first introducing the ‘Conscious collection’ where garments were said to be made with “at least 50% sustainable materials” (H&M).
But, garment production remains in full swing and their fast fashion model doesn’t seem to be changing.
According to the company’s clothing donation handler, only 35% of the clothing collected in their schemes is recycled (CBC). Customers are incentivised to use H&M’s recycling scheme with more vouchers for H&M, so really, the cycle of fast fashion just continues.
Ok, so not strictly one company — but this sector seems to have a knack for getting itself embroiled in all sorts of greenwashing scandals, so we had a few to choose from.
ExxonMobil was responsible for one of the worst oil spills in US history, causing environmental devastation across 1,300 miles of coastline in Alaska (History). So, when they touted their experimental algae as being a biofuel that would reduce transport emissions in the future, they raised eyebrows.
Then there’s Shell. A fossil fuel giant and mass polluter who has been extracting oil from the Niger Delta for well over 50 years — they were forced to pay reparations to communities for oil spills dating back to the 1970s (Guardian).
Their long-term advisory partnership with British Cycling faced backlash and gave us this great line from Greenpeace UK policy director Dr Doug Parr:
“The idea of Shell helping British Cycling reach net zero is as absurd as beef farmers advising lettuce farmers on how to go vegan.” We couldn’t have said it better ourselves, Dr Doug.
The drinks giant has often found itself at the top of the world’s largest polluter lists (Guardian).
It’s unsurprising, given the corporation has more than 500 brands with an estimated 100 billion plastic bottles produced each year (Plastic Soup Foundation).
With these figures in mind, it’s unsurprising that the folks at Coca-Cola have been vocal about promises to act more sustainably.
But, as one of the world’s biggest polluters, there was a huge backlash when it was announced that Coca-Cola was sponsoring COP27, the world’s largest climate conference. Particularly as the company has had tv ads banned by the ASA over allegations of greenwashing (Proactive investors).
The last spot on the list goes to Volkswagen, which was embroiled in arguably the largest greenwashing scandal of the decade.
11 million Volkswagen cars were fitted with software to cheat emissions tests. In reality, the carmaker was producing 40 times the amount of emissions that were permitted at that time (Jumpstart). All the while, their marketing was telling consumers they were buying cars with “clean diesel” engines.
At CIRCA5000, we are on a mission to make sure that every company in our funds is selected because it meets the highest environmental and social standards.
Impact investing is about cutting out the companies that don’t have these standards at the core of their business model.
Companies making a truly positive impact don't ‘appear’ to do good, they are solely focused on the aim to create a return for their shareholders while having a positive impact on society and the environment.
The information provided above does not constitute financial advice. You should fully understand the products you intend to invest in before making an investment decision. As with all investing your capital is at risk.