News and Analysis | Richard Ravelin | June 14, 2022

What is greenwashing and can you spot the harmful practice

It’s been a rather busy few weeks in the world of ‘greenwashing’. Last month, Deutsche Bank was raided for alleged involvement in a trillion-pound greenwashing scandal. According to Sky News, it’s alleged the DWS, the management asset part of the company, sold products worth more than $1 trillion as being more sustainable and environmentally friendly than what they actually were. It’s important to say, the DWS denies the allegations.

While that investigation goes on, many will be wondering, firstly, what is greenwashing, and secondly, how it’s come about. So, let’s get into the details.

What is greenwashing? Greenwashing is a practice where products, goods or services are labelled as ‘green’ or ‘environmentally friendly’ as a marketing tactic, when in fact they are not. This means the companies, organisations or groups promoting these products, goods and services, could be profiteering off a misleading claim.

As consumers have become more aware of green and environmental issues, the problem of greenwashing has become far more reported in the media and wider society. Consumers appear more willing to abandon groups who engage in the practice and don’t tell them the truth. 

So, who coined the term and when did it start? The greenwashing term was coined back in the 1980s by environmentalist Jay Westerveld. He used it in one of his research papers following a trip he had made to the South Pacific nation of Fiji. While he was exploring the island, he decided to take a look at a resort, which he wasn’t staying in, and spotted a sign telling those using their facilities to make sure they reuse their towels in order to protect the ocean ecosystems. But he thought this was ironic given the fact the same place was engaging in a building programme.

Ironic or not, it can be difficult to spot companies, groups or organisations who engage in greenwashing because not all activities are as obvious as what happened at the resort Jay Westerveld was visiting. The UK’s financial watchdog, the Financial Conduct Authority (FCA), has told City AM it is ‘actively’ monitoring firms for greenwashing. When it comes to Path and our ethical advisers, though, you can be sure that when we make a claim about the environment, we back it up with action and fact. 

With the growing environmental concern we’ve already mentioned, you can be sure Path will give you the best advice we can on making investments which truly do preserve the planet.

Nobody wants to be a victim of greenwashing. With our trusted team, we’ll do our best to make sure your pensions and investments are put into projects which actively preserve our surroundings rather than things which blight our landscape. 

Path recently received B-Corp certification – and you can’t get this status if you engage in greenwashing. It proves our environmental credentials. For those who are unsure, we encourage them to ask questions about where their money is invested.

Whoever you are and whatever your background; whether you’re an environmental campaigner or just someone interested in the environment, we’ll map through your finances and find solutions so you’re making the most of your money while reducing the global carbon footprint.

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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