A Checklist to Tell If Your Portfolio Is Guilty of Greenwashing 

The boom in so-called ESG investing has been accompanied by a sharp rise in complaints about greenwashing -- exaggerations or misleading statements about environmental claims. It’s a rise driven by the so-called “greenium” -- the money companies can save by convincing lenders to offer better terms when borrowing is tied to an ESG (environmental, social or governance) goal. Figuring out what’s real and what isn’t has grown even more complicated in debt markets, where a host of new lending formats have been introduced, including some that link payment terms to progress on specific ESG goals. Here are some factors to keep in mind to help you figure out if your money is really doing what was promised.

Bloomberg News analyzed more than 100 bonds tied to issuers’ ESG credentials worth almost $68 billion that were sold by global companies to investors in Europe and found that the majority were tied to climate targets that are weak, irrelevant or even already achieved. Some companies promised to do no more than maintain their existing ESG ratings.