It is an inescapable reality that climate change has come knocking on our front door \u2013 and those on the frontlines battling the impacts of climate change can tell us that some have experienced this call earlier than others. However, it is undeniable that this is the issue of our (and future) generation(s). In fact, it is now evident that climate change, sustainability and ESG criteria (Environmental, Social and Governance) have become trending topics across countries, sectors, industries and even political parties, given that societal perceptions and consumer demands for better accountability have changed.<\/p>\n
For instance, ESG-focused institutional investment is predicted to increase by 84% in 2026<\/a>. In emerging markets, ESG-linked debt issuance tripled to $190 billion in 2021<\/a>. In the private sector, increasingly, more companies are aiming to incorporate ESG considerations in strategies and portfolios. And in education, students have shifted towards choosing careers in sustainability, as educators claim \u201cthe sustainability job market is booming<\/a>\u201d. Needless to say, an increasing number of people want to become part of the \u201cclimate solution\u201d \u2013 and this is excellent news for all of us. However, what should be of concern and merits supervision is whether these trends and new interests in sustainability are truly driving structural changes towards low-emission and climate-resilient development in different sectors and contexts \u2013 or if they are just easily purchasable initiatives with limited impact.<\/p>\n In the last couple of years, governments, international organisations and regulatory bodies have heeded calls for tighter regulations and disclosure requirements from consumers, activists and scientists to adhere to the Paris Agreement and the Sustainable Development Goals. This has resulted in an increasing number of climate and biodiversity disclosure frameworks, sustainability initiatives and guidelines to which financial institutions, banks, companies, asset managers, insurers and other relevant actors need to adhere. This regulatory and consumer pressure has translated into a desperate search for ESG and sustainable finance experts to build internal capacities and comply with these requirements.<\/p>\n In general, this is a move in the right direction: market signals are changing and producing results, with societal norms now dictating that it is no longer acceptable not<\/u> to act against the biggest issue of our time. However, this is also a double-edged sword: in trying to quench this thirst for appealing to a more demanding consumer base, to comply with new regulatory and disclosure standards and take advantage of growing returns from investing in the sustainable finance sector, the race for sustainability can quickly turn into shallow climate results, with low-quality standards. Thus, greenwashing.<\/p>\n Greenwashing is generally understood as providing consumers misleading or false information on a company\u2019s activities, actions, products and policies regarding their environmental impact, claiming they are \u201cenvironmentally friendly\u201d when they are not. This can also apply to professional competencies, as Prof. Dr. Kim Schumacher posits<\/a>, when individuals practice \u201ccompetence greenwashing\u201d by claiming ESG and sustainability expertise with no material academic or professional backing.<\/p>\n As we transition towards more sustainable financial, regulatory and business models, we are increasingly in the look for expertise to aid in internalising the \u201cnew normal\u201d and translating it into efficient and effective policies, regulations, strategies and mappings. However, the demand is exceeding the supply of expertise. In worst-case scenarios, marketing professionals simply add \u201cESG\u201d to their position titles, without relevant professional or academic experience, as Prof. Dr. Schumacher suggests. This is dangerous and irresponsible.<\/p>\n If we seek real results in the coming years, companies publishing climate strategies and consulting firms providing guidance on these topics need to include scientific experts (i.e. with backgrounds in planetary science, ecology, biodiversity, etc.) in their main discussion and decision-making tables. This will ensure that these strategies and related advisory are cemented on real science, which is crucial to produce a tangible positive impact.<\/p>\nThe concept of greenwashing and competence greenwashing<\/h2>\n
Our role in preventing a cautionary tale<\/h2>\n