Sustainable finance: Transparency is improving on several fronts

Sustainable finance is currently experiencing a crisis of confidence. The idea that an investment can both generate financial returns and benefit the planet is being questioned from all sides. While this idea was gaining momentum a few years ago, it is now struggling to generate enthusiasm and is increasingly met with mistrust and scepticism. 

This loss of confidence in sustainable investment strategies is evident on both sides of the equation: the “investment” side and the “sustainable” side. Let us first consider the ‘investment’ perspective, that of investors whose priority is to optimise the risk/return ratio. In today’s tense, short-termist and militaristic geopolitical context, it is increasingly difficult to gain acceptance for the win-win argument – that sustainable equals profit. 

Let us now look at the issue from the other side — the ‘sustainable’ side — and adopt the perspective of investors who want to improve the state of the world. Here, the negative sentiment stems from a lack of credibility, also commonly referred to as greenwashing. In recent years, studies, media investigations and legal proceedings have highlighted various cases of exaggerated or unfulfilled promises. Certain investment funds marketed as “green”, “sustainable,” or “responsible” have turned out to be too similar to traditional funds to credibly claim a positive impact. More…

Source: Covalence / illuminem