The bar for environmental impact may well have been raised by the Advertising Standards Agency’s (ASA) warning to HSBC, and the investment industry would do well to take note.
Last week, the Financial Times reported the ASA was preparing to tell HSBC two of its adverts promoting green initiatives were ‘greenwashing by omission’ – misleading the public by promoting its sustainable financing while failing to mention its continued financing of thermal coal mining, and other oil and gas projects.
In a draft seen by the paper, the ASA said people seeing the ads would assume the bank to be making “a positive overall environmental contribution as a company” while in fact the bank funded £14.3bn of fossil fuels last year, according to the Rainforest Action Network. If upheld by the ASA, this would mark the first time the agency has issued a warning to a large bank in this way.
Greenwashing by omission is an interesting interpretation, and one that could have a big impact for the investment industry. After all, HSBC is by no means alone in financing both climate solutions and fossil fuels.
Like many things in the world of sustainable investment, ‘greenwashing’ has a shifting and evolving definition. When members of the ESG Clarity team were in the US in February this year, one industry insider told us greenwashing stateside operates as ‘not doing what you say you’re doing’ whereas in the EU it’s often interpreted as doing something not up to standard of the green agenda.
Officially, greenwashing is defined by Oxford Languages as the disinformation disseminated by an organisation so as to present an environmentally responsible public image. Such a high-profile case of greenwashing by omission sets an important precedent – disinformation can arise from not presenting a full picture of your firm’s environmental impact.
In that line of thinking should asset managers publicising their net-zero commitments have to be clear on assets they are not planning to transition? Should new ESG products always be caveated with firms’ non-ESG strategies?
The short answer is yes, whether omitting this information could lead to greenwashing claims or not. Providing the full picture is good practice and leads to better transparency.
Transparency is not just nice to have, we can’t take effective action on climate and biodiversity without it. Consider the impact of policymakers assuming more private finance is going net zero than it really is. Greenwashing scuppers the conversations and is slowing action on the environment that we can’t afford to slow.
While we are working on effective engagement and decarbonising the global economy there is no space for sneaky omissions.
