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GREEN CRAP? ESG CLAIMS IN SPOTLIGHT WEDNESDAY 2 NOVEMBER 2022
ISSUE 3,852
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GREENWASHING FEARS REDUCE TRUST IN ESG FUNDS CHARLIE CONCHIE FUND managers are struggling to sell their green investment products to financial advisers as rampant greenwashing erodes trust in the environmental, social and governance (ESG) industry, fresh research published yesterday revealed. Just one per cent of financial advisers and wealth managers said they now “completely trust” claims made by supposedly green and ESG funds, the Association of Investment Companies (AIC) found, with a lack of evidence cited as the top reason for a collapse in faith among investors. One wealth manager surveyed by the body said they would need money managers to cough up “real examples in the portfolio” before they believed the green claims made by funds. The fresh findings underline a sizable trust gap facing ESG investment after a slew of greenwashing claims against top financial firms and grow-
ing concerns over a lack of regulation in the industry. HSBC was the latest firm to face allegations this week as it was accused of raising cash via sustainability-linked bonds and channelling it into fossilfuel linked projects. The firm rejected the claims and said it was playing an “important role in the nascent SLB market”. Watchdogs are now edging into the space and looking to clamp down on fanciful sustainability claims by fund managers. The Financial Conduct Authority (FCA) last week revealed plans to curb the unverified use of terms like ‘green’, ‘sustainable’ and ‘ESG’ as well as ramping up disclosure requirements on firms to prove unsubstantiated claims. It mimics a similar push by the advertising watchdog, who also found fault with HSBC’s public-facing claims. Analysts at the AIC said yesterday that advisers and wealth managers were now “keenly aware of the risks of
greenwashing” but still backed the need for sustainable investment opportunities. “Despite scepticism about ESG claims, financial advisers and wealth managers remain supportive of ESG investing,” Nick Britton, head of intermediary communications at the AIC said. The survey of around 200 financial advisers in the UK also said they were more pessimistic about the performance of ESG-oriented funds than they were this time last year, with inflation and interest rates as well as geopolitical shifts affecting investment appeal. “In the light of this, the FCA’s decision to impose stringent rules on how funds present their sustainability claims looks timely, and it’s one we fully support,” Britton added. Fund managers are set to boost their ESG assets to almost £30 trillion by 2026, according to PwC, but the industry has faced a reckoning as investors double down on fossil fuel investment in the wake of rising energy prices.
SAVE SIMPSON’S Landlord closes the door on historic City institution ANDY SILVESTER A CAMPAIGN has been launched to save historic City lunch spot Simpson’s from permanent closure after its landlord issued a winding-up petition related to pandemic-era rent arrears. Manager Ben Duggan told City A.M. yesterday that the landlord, a Bermudan-registered holding company, had demanded immediate payment for rent arrears accrued whilst the restaurant was shut during the pandemic – rather than over the rest of the lease, as many other landlords have done with hospitality
businesses hit hard by lockdown restrictions. The locks have been changed following the demand. A crowdfunder, Save our Simpson’s, has been launched to meet the bill. Simpson’s, down an alleyway on Cornhill, is famed for its no-nonsense a la carte menu, its affordable wine list and its stewed cheese pudding. Duggan – who said the business was enjoying higher revenues now than in October 2019 – said: “I’ve so many regulars who had their first City lunch at Simpson’s. “Rubbing that all away would be a huge loss to the City.”
There will be profit: Oil prices and trading performance boost BP’s profits NICHOLAS EARL BP UNVEILED another bumper round of monster profits yesterday, powered by soaring gas prices, reigniting Labour calls for the windfall tax to be toughened up on North Sea fossil fuel producers. The British energy giant raked in £7.1bn in underlying earnings in its third quarter this year between July
and September. Overall, its global profits for the first nine months have jumped to £19.8 from £7.6bn in the previous year. This has been driven by historically elevated oil prices – which remain above $90 per barrel despite a recent slide – and record gas prices amid concerns of supply shortages following a Russian squeeze on European gas flows.
The hefty takings follow in the footsteps of rivals, including Shell, which have also announced mega profits yet again this year. Leading the pack is Saudi Aramco, which has revealed eye-watering profits of £36.8bn, one of the biggest quarterly-trading performances in business history.
Labour has urged the government to strengthen the Energy Profits Levy by removing the investment relief and backdating it to January – even though it was announced by the government in May.
BP said they expect to pay around £700m this year through the already existing levy. Labour’s Ed Miliband said PM Rishi Sunak should “hang his head in shame that he has left billions of windfall profits in the pockets of... companies, while the British people face a cost-of-living crisis”. £ CONTINUED ON PAGE 3
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