23 July 2024
The illusion of integrity: Confronting governance washing in sustainable investing
Governance, alongside environmental and social factors, is a crucial component of ESG criteria. Governance washing intersects with ESG investing, as fund managers may manipulate governance-related disclosures to inflate ESG ratings and attract investors with an ESG focus. This deceptive practice undermines the integrity of ESG frameworks and compromises the effectiveness of responsible investment strategies. Governance washing has wider impacts: misled investors may invest in poorly governed companies, putting their returns at risk, and further undermining trust in ESG investing, slowing progress towards sustainability and ethics.
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