The surprising impact of ESG

ESG is beginning to influence fund board composition but not always in the ways that one would have expected.
Earlier this year The NED’s sister publication, the ESG Report, came up with the term ‘governance-washing’. It is intended to be added to the lexicon of the ESG industry alongside green-washing. Fund managers who practice governance-washing are those who want investors to think that they are more diverse and ESG-orientated than they actually are. From analysis of the fund board composition data of a lot of asset managers this would apply to quite a lot of the industry.

But it is not just the lack of diversity on fund boards, or at senior management level in the industry. The term governance-washing can also be against fund managers who have re-categorised some of their old funds, as many of them have done, as sustainable when they are anything but that. They have renamed their funds as sustainable in order to cash in on the ESG investment boom.

To read more on this story see the Sept-Oct issue of The NED.