If there is one acronym that is shaping strategic discussions of corporates across industries like no other, it is ESG. It has become apparent that the topic moved from climate activists’ street protests to the board room and top of business leaders’ agendas around the world. As banks provide the fuel for the economy, they are expected to act as the main facilitator for a more sustainable future. While there has been significant media attention on the substantial value of ESG, there are always two sides of the coin and the inherent risks of this “flight to green” should not be ignored.
As Assets under Management of ESG investments keep on growing at ever increasing rates, voices of sceptics are rising at the same speed. Are ESG investments really what they claim to be, or are they simply a marketing tool to repackage existing assets and sell them at a green premium?
Sustainable Banking is at an inflexion point, driven by consumers who demand sustainable change but are at the same time suspicious on the truthfulness of labels, ratings and disclosures. With increasing regulations and pressing deadlines that lack clear implementation guidance and product definitions, greenwashing might continue rising until bank-wide standards are adapted as well.