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Addressing Greenwashing Risks in ESG Fund Disclosures


On May 10, 2024, CFA Society Philippines hosted an insightful webinar with Mr. David Von Eiff, Director for Global Standards at CFA Institute, titled "Exploring Greenwashing Risks in Investment Fund Disclosures: An Investor Perspective." The webinar addressed the impact of greenwashing on the investment industry and offered strategies to mitigate these risks.

Mr. Von Eiff explained that greenwashing erodes investor trust, leads to ESG fund outflows, and results in misallocated assets. The core of his presentation was a detailed analysis of ESG disclosures from 60 investment funds (30 from the EU and 30 from North America), aimed at understanding issues that could lead to perceptions of greenwashing.

Key points included the challenge investors face in comprehending sustainability characteristics due to inconsistent disclosures, omissions, unsubstantiated claims, and exaggerated features. The study identified five instances of ESG-related information likely to confuse investors. Proving greenwashing is difficult without access to internal records or third-party research, and analysis often yields varying conclusions.

To address these issues, the study recommended enhancing disclosure standards, ensuring transparency, and implementing stronger regulatory frameworks.

The event highlighted the need for reliable and consistent ESG disclosures to maintain investor trust and support sustainable investment practices. CFA Society Philippines remains committed to promoting best practices within the investment community.