Invest

Frida Bratt, Savings Economist, Nordnet Bank Sweden
Sustainable investments:

This is how savers should avoid greenwashing

There is a jungle of labels available to the private savers with the purpose to make it easier to avoid greenwashing. But sustainable investing is still difficult. Perhaps, and hopefully, a new EU regulatory framework, the taxonomy, could be an important part of the solution.
By Frida Bratt

Today, it´s difficult for a saver to evaluate, analyze and critically examine whether a product with the words “green”, “ESG” or “SRI” really keeps what it promises. Is the investment really sustainable, and worth its higher fee?

To their help, the private savers in Sweden have a plethora of labels and rating systems to choose from, in the form of globes, leaves, swans and other markers. These classifications can help as individual pieces in a bigger puzzle, but they have their shortcomings. One obvious challenge is that there’s no clear and common definition of what “sustainable” really means when it comes to investments.

Should a fund manager for example exclude all “bad” companies in order to obtain a higher sustainability rating? Or is it better to start a dialogue with the company and try to influence the business to move in a sound direction?

Perhaps the answer to this great challenge that the industry faces towards savers is just around the corner. The EU has developed a standard, with common guidelines for what is required for different economic activities to be compatible with climate goals. This standard should form the basis for labeling sustainable products, and it´s called the taxonomy. Fund companies and others who offer sustainable products to savers will have to inform about the extent to which their products are compatible with the taxonomy.

This is a big and important thing for both the industry and for savers, and it therefore deserves a lot of attention. Hopefully, the initiative will be expanded from focusing only on the environment, to also take social aspects into account. This can be invaluable for everyone who wants their saving to be sustainable – and quite a few of us do.

Greenwashing is a form of marketing spin in which green PR (green values) and green marketing are deceptively used to persuade the public that an organization’s products, aims and policies are environmentally friendly and therefore ‘better’ appeal to nature
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