Investing in environmental, social, and governance has been criticised on multiple fronts. Experts say investors are particularly sceptical of the "environmental" component. Furthermore, firms are being accused of "greenwashing" or overselling their commitments to sustainability.

According to some reports, the problem or part of it lies with vague definitions, which leads to increased scrutiny of the environmental part of the claims. The previous publications said that a single company's ESG rating could vary between credible credit-rating firms.

Peter Reali, managing director of responsible investment and engagement at Nuveen, said, "There’s a lot of pressure on investment managers to demonstrate the value that they’re getting out of their stewardship work."

German asset management firm DWS has been accused of greenwashing by misrepresenting the ESG credentials of its investment products.

On Wednesday, the company's Frankfort offices were raided, prompting CEO Asoka Woehrmann to resign. The CEO said earlier this year that DWS's drive into ESG investment was "a great success story."

Source: McKnights

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