Coline Pavot

Greenwashing: A challenge to us all

For La Financière de l’Echiquier (LFDE), a responsible investor for 30 years, transparency is king. We make it a point to clearly lay out our process and our products, making sure that we use our clients’ savings in keeping with the reality of managing those savings.

When faced with greenwashing or certain aggressive or excessive marketing strategies, asking a few questions can make things clear. Is this a low-carbon fund? Does this fund invest in companies in transition? Does this fund invest in solutions like renewable energy? What are the fund’s “climate” exclusions? How the fund is presented is crucial because the underlying realities can be remarkably diverse.


The many faces of SRI¹

We don’t believe there is just one way or the right way to do SRI and invest for the good of the climate. There are multiple ways. They are complementary and can be tailored to our client categories and aspirations. Some funds and clients will want to exclude fossil fuels, while others will choose to invest in industry operators who have begun their transition in earnest, making their commitment to spur that transition. What matters is that the message to the investor is clear, leaving no doubt as to what their savings will be financing. To achieve this, the management company must be transparent. Its methods and investments must be accessible to all and clearly laid out, through transparent inventory and the publication of reports on ESG² performance indicators, including climate indicators. For LFDE, transparency is everything – and all of our documentation is available on our website.


Using labels as guides, when nothing is uniform

Labels are a way for investors to find their way in the jungle of SRI funds available on the market. They guarantee investors that the labelled funds follow a rigorous management process for choosing virtuous issuers with a selective approach.  Labels also guarantee the establishment of a voting and engagement process for a fund, which requires a certain level of transparency. For example, not all these guarantees are included in the SFDR classification that some would like to see replace the label.


Today, the problem is the lack of uniformity in the various regulations – specifically between the AMF³ doctrine, the European framework, and the international framework. The tidal wave of regulations is taking up the time of management firms’ SRI teams, not to mention the lack of clarity on this framework which makes its application complex and disparate. The AMF doctrine is probably the most fully fleshed-out regulation. Its framework is clear, it is controlled and applied by the AMF, and it is stringent. The same cannot be said of the SFDR, for example. The importance the SFDR has taken on in recent months seems out of all proportion. Since this regulation is open to interpretation, it creates real gaps among management companies, further blurring things for clients. And more and more of those clients want to adopt SFDR as a benchmark for picking their funds, at the expense of labels or a more in-depth proprietary analysis, which we think is a shame.


Expertise: the master key

The DWS “affair” in August 2021 and the BlackRock “affair” in January 2020 have the virtue of reminding sustainable finance stakeholders that it is better to know what you’re doing before you make it known.

There is intense pressure on management companies to claim they are 100% SRI, but this must not be done at the expense of quality in the process of integrating ESG into that management. These affairs demonstrate that sustainable finance is a complex issue. Education and transparency are essential when we want to announce our activities to the public and be understood.

We don’t see many initiatives being brought against greenwashing. A few years ago, the United Nations Principles for Responsible Investment (UN PRI) bolstered their eligibility criteria, but this has not really succeeded in excluding the least-ambitious players. In March 2021, the Net Zero Asset Manager Initiative asked its signatories to make their commitments a reality using quantified targets and choosing a baseline scenario as a common core. That’s one way to move beyond good intentions and into real actions, to limit the risk of empty messaging.



[1] Socially Responsible Investment
[2] Environmental, Social, and Governance
[3] French Financial Markets Authority