As ESG investing has exploded in popularity, so has greenwashing. Greenwashing is the practice of a company, or a fund manager, to make their company or fund look more sustainable, or to boost its ESG factors. A company may do so to make it look more attractive for investment from an ESG-focused investor or fund. A fund manager may do so to attract more investment funds.
An example of greenwashing is if a company which scores generally quite poorly across its ESG factors, makes a modest change to one of its processes or behaviours, and then engages in a PR campaign around that activity. This would give the impression the company's principles are aligned with sustainability. However, many other underlying ESG factors are unchanged.
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