Tideline Managing Partner Ben Thornley and BlueMark CEO Christina Leijonhufvud today issued a joint statement in response to recent regulatory developments in the U.S. and EU aimed at clamping down on greenwashing and impact-washing in the investment management industry.
Here is the full text of the statement:
Both the SEC in the U.S. and the ESA in Europe have begun to tackle the risk to investors of misleading impact and ESG claims. As a result, investment managers making impact and ESG claims need to be prepared for the business risk and liability implications if they are not confident there is consistency between claims and practices.
These efforts aimed at clamping down on greenwashing and impact-washing in the investment management industry are welcome developments and represent key steps towards improved labeling standards for ESG and impact investing products.
The introduction of Sustainable Finance Disclosure Regulation (SFDR) requirements in the EU and the SEC’s recent ‘Risk Alert’ on ESG investing reflect a growing call for investors to back up their impact and sustainability claims with evidence. Regardless of which label an investor chooses to use—ESG, responsible, sustainable, impact, etc.—the message from regulators is clear that investors must have the right policies and practices in place to back up what they claim to be doing or the results they claim to be achieving.
We at Tideline and BlueMark have been working with impact investors for nearly a decade to build credible impact management systems that can stand up to scrutiny. We believe that any investor that chooses to self-identify as an impact investor must have an impact management system to ensure that impact considerations are integrated into every phase of the investment process, from strategy design and due diligence to portfolio management and performance reporting.
This “do what you say” mantra is essential to preserving trust in impact investing, and is a big part of why Tideline launched BlueMark in 2020 as a provider of independent impact verification services. By bringing increased transparency and accountability to the impact investment market, we are driving efficiency, clarity and transparency in the manager/investor relationship and ensuring that impact promises lead to real impact results. We are encouraged by the work of financial regulators to contribute to improved transparency and accountability in ESG and impact investing.
While more work is still needed to harmonize around global standards, regulators are signaling that there needs to be a bar for what is considered a credible ESG or impact strategy. Independent verification can help investors meet that bar by providing third-party assurance of investor claims and practices. From the threat of new regulations to the difficulties of complying with existing regulations, investors will continue to need a resource to help mitigate and address both reputational risks and legal liability.
Tideline is a specialist consultant for the impact investing industry providing expert, tailored and actionable advice to clients developing impact investment strategies, products and solutions. Learn more at www.Tideline.com.
BlueMark, a Tideline company, provides independent impact verification services for investors and companies. With a mission to strengthen trust in impact investing, BlueMark’s services are designed to meet the need for reliable, third-party assurance of impact claims and practices. Learn more at www.BlueMarkTideline.com.