24 October 2019

Financial Times: Bankers push back against ‘greenwashing’ criticism

Executives have defended issuers against the “greenwashing” accusations, saying that while green bonds may be an imperfect weapon in attacking climate change, they can still help to move companies in a cleaner direction.

“There is not a lot of greenwashing,” said Ralph Hamers, chief executive of Dutch bank ING. “A lot of issuers are really serious about this subject and are really identifying specific projects that they target with this kind of money.”

Mr Hamers said the industry, as it matures, would get better at assessing which deals are genuinely benefiting the environment.

This month, the total amount of sustainable debt in global markets surpassed $1tn. As the market has grown, so has investor scrutiny. Just as asset managers have faced questions over whether the make-up of their environmental, social and governance-focused equity funds justify their labels, green bonds have been branded “oxymoronic” when they are issued by companies or countries contributing to global greenhouse gas emissions.

To standardise what qualifies as green bonds, the International Capital Markets Association has established voluntary guidelines.

“The borders of what can reasonably be called green have been tested a few times,” said Johanna Köb, head of responsible investment at insurance group Zurich, adding that greenwashing, in her view, does not happen often.

“Financial market participants are now not only able but also interested in having an informed debate about what is ‘green enough’ to merit a green bond label,” she said, calling it one of the biggest achievements of the industry so far.

Last week, Kristalina Georgieva, IMF managing director, addressed concerns about greenwashing, saying that “standardisation and classification of what constitutes sustainable and green” is needed for the industry to flourish.

Full article on Financial Times (subscription required)

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