Sustainable spinners need to be outed

Written by Rebecca Jones on 29th Jan 2019

This weekend it was revealed that, rather than remove palm oil, frozen food chain Iceland had simply removed its name from 17 of its products. The move follows a huge publicity campaign featuring a banned TV advert produced in collaboration with Greenpeace in which the brand promised to remove palm oil from all of its own brand produce by the end of last year.

Speaking to the BBC, the firm said that ‘technical issues’ had meant that it was unable to follow through on its promise to take palm oil out of its supply chain and so – rather than ‘mislead’ customers, it had decided to remove its branding.

This, most would agree, is a pretty unsavoury piece of sustainable spin – not least because Iceland benefitted enormously from the advertising campaign that went viral not long after it was released on Twitter, generating over 30 million views online.

Of course, Iceland is not the first, and nor will it be the last sustainable spin doctor. Indeed, after decades of ignoring environmental activists as the average consumer happily consumed, big business is now frantically signing up to pact after pledge trying to prove its eco credentials. And often, these promises are not just hollow – they are out-and-out lies.

Good Money worries

Nowhere is this threat more worrying – however – than in the money space. As long-term Good With Money readers may know, getting pension and fund managers to pay attention to the wishes and values of their customers has been an uphill struggle since the first ever UK ethical fund launch in 1984 (Friends Provident’s Stewardship, now F&C Stewardship) – and we still have a long way to go.

However, the past three to five years has witnessed an explosion of launches in this space – from  investment funds to bank accounts to pension products that have been readily labelled ethical, or green, or sustainable or impact. Many of these are fantastic products and ones that Good With Money is happy to shout about through our many guides and features. Other’s, however, are not.

The proliferation of the ethical, or sustainable, or Environmental Social and Governance (ESG) or – more recently – impact label in the investment world is creating concern, with bodies from the EU, to the UK’s Investment Association (LONG overdue) to financial advisers and leading ethical managers like Rathbone Greenbank calling out ‘greenwashing’ as the next big threat the sustainable investment industry.

Areas of prime concern include the passive investment, or index tracking space. Here, a number of ethical or ESG, or socially responsible Exchange Traded Funds (ETFs) have been launched by players including the world’s biggest asset manager – BlackRock – as well as smaller wealth managers.

Typically these claim to be ethical or socially responsible by virtue of excluding a few ‘sin-stocks’ in areas including tobacco and arms. However, a cursory glance under the bonnet of these funds usually reveals fossil fuel and mining firms, big banks, pharmaceutical giants and consumer behemoths widely accused of causing death and destruction to customers and communities.

As they are so cheap (typically charging annual fees as low as 0.2 per cent), ETFs and passive funds have huge mass-market appeal while the firms behind them often also have huge marketing budgets. As such they are widely used by private investors, as well as by pension funds – a form of investment few of us can now avoid thanks to the introduction of auto-enrollment.

Preserving impact

Impact investing – one of the newest forms of sustainable investment around – is also increasingly being co-opted into this mass. The ‘darkest green’ of all of the forms of Good investment, impact investing is about putting money directly into companies and projects having a direct and measurable positive impact on the world: think community energy, social housing or reforestation.

However as the investment industry catches on to a wave of millennial fervor aimed at making a difference in an ailing world, impact is finding its way onto products that in some cases would barely scrape an ‘ethical’ label for screening out Imperial Tobacco.

Money matters to all of us. Our finances, no matter how massive or meagre, is were we have the most personal power to affect change; both in our own lives and the lives of others. Making positive, sustainable choices in products from bank accounts to pensions to investments has the potential to change the world, taking the money out of the hands of the bad guys, and putting into those of the Good.

However, lest sustainable investment go the way of palm oil – which has attracted rising and falling waves of consumer attention over the past decade – we need to be vigilant. It’s up to us to call out the sustainable spin doctors while celebrating the companies, investment firms and banks striving to make a better world.

As ever, be sure to read the small print. And look out for the branding.

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