Greenwashing – and a lack of education about it – represents the biggest challenge to delivering ESG improvement in the infrastructure sector, according to panellists at the Infrastructure Investor Network Global Summit, which opened in Berlin today.
“Greenwashing is the biggest challenge facing progress on ESG,” said Mike Hoverman, principal at real assets-focused GP CIM Group, on the opening panel of the Summit’s ESG and Sustainability Forum.
Greenwashing typically refers to companies or investors making claims about their sustainability credentials that don’t fully reflect their actions.
“Everyone has seen the rolling back of net-zero targets and ESG objectives by big fossil fuels companies; that’s been rewarded by shareholders,” he added. “We are at risk of the same thing in the private industry.”
Karolina Attspodina, CEO & co-founder of renewable energy company We Do Solar, agreed greenwashing was a problem. She said there was “simply not enough education” on the dangers of greenwashing and that greenwashing advertising campaigns are commonplace.
Simon Whistler, head of real assets at Principles for Responsible Investment, noted that “regulation has an important part to play” in stamping out greenwashing, but that “if everything is left in the hands of lawyers, we lose sight of what we are trying to achieve”. He added that the industry itself needs to be more transparent.
On the other hand, the panel played down the threat posed by the ESG backlash that is currently playing out in several US states. “Despite attention from the press, that [ESG backlash] is not the biggest challenge,” Hoverman said. While there is “lots of noise in the US market” as a result of states taking different stances, “we are seeing the “steady march of progress” overall.
Whistler added that the scrutiny caused by the backlash represented an “opportunity for the industry to make sure it has its house in order and is doing things right”. “For a long time it has been easy to say a lot of things about ESG and no one has put a spotlight on it.”
There was agreement that the backlash is causing a change of language around sustainability, though only in the US as yet. Hoverman noted a “definite” change as companies considered “what does it mean to make those commitments [to ESG goals], and what are we going to held to”. There was consensus that the trend was yet to reach Europe.