WHEB: anti greenwashing rules provide clarity

WHEB Asset Management has published its 2023 Impact Report in which it says the market exit of some funds following the introduction of anti-greenwashing rules should provide clarity to investors.

The report describes how, what it calls “ESG tourists”, have exited the market following anti-greenwashing regulation, leading to outflows of ESG related funds. The report says, “ESG tourists – asset managers that stampeded into the sustainability market just a few years ago – are now packing their bags” as the depth and breadth of anti-greenwashing regulation bites. This ‘market shedding’ of fund providers who do not have the staying power of dedicated impact and sustainable investment houses should provide clarity for financial advisers, fund selectors, and end clients.

George Latham, managing partner at WHEB Asset Management, says, “After decades in the margins, sustainability investing enjoyed its place in the sun through 2018-22 but waned in prominence in 2023, as interest rates and the rise of artificial intelligence dominated investment narratives. This turbo-charged the performance of ‘mega-tech’ businesses like Amazon and Nvidia which we do not believe meet key criteria to be considered to provide a positive sustainability impact.

“Naysayers quickly pointed to recent volatility in Environmental and Healthcare services – large markets for sustainable and impact funds – as supposed evidence of failings in sustainable investing, rather than the typical behaviour of a market cycle. Compared to AI, it’s not currently a sexy story to tell that companies are getting on with delivering carbon reductions, diversifying their senior leadership and employee base bit-by-bit, but that progress is occurring nonetheless.”

“As a result, ‘ESG tourists’ – asset managers that stampeded into the sustainability market just a few years ago – are now packing their bags. This, along with the huge swell of anti-greenwashing regulation, is clarifying the investment offer for retail and institutional investors alike. As our long expertise in sustainable investing and deep roots in the impact investing movement attest, we will be staying the course – and expect our investors to benefit financially in the long term as a result.”

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