There is a lot to calling something green. Green claims come in different forms but they tend to be either advertising/marketing claims or names of investment funds/strategies. Here’s one that might have gone a bit too far, according to Bloomberg’s Matt Levine. If you hadn’t already heard, The World Coal Association rebranded itself as “FutureCoal: The Global Alliance for Sustainable Coal.” Levine lays in with his trademark sarcasm:
“… presumably the point here is that some investors, activists, governments, etc., are going to see that name and read ‘The Global Alliance for Sustainable’ and figure ‘ah well that’s good then’ without getting to the word ‘Coal.’ I suppose starting with ‘FutureCoal:’ is a mistake? Really they should put that off as long as possible. Call it ‘FutureGreen: The Global Alliance for Responsible, Sustainable and Clean Energy Derived From Natural Resources Such As Our Favorite Resource, One You Might Have Heard of, It’s a Really Good One, You’re Not Going to Believe This, Get Ready, It’s Coal.’ No one’s gonna read that far.”
He has a point, referring to a company he wrote about previously called GreenSaif Pipelines Bidco:
“which is Saudi Aramco. I mean, it isn’t really; it’s a special purpose vehicle that owns some Saudi Aramco pipeline joint ventures and that sold some bonds to finance them. The bonds found their way into an index of environmental, social and governance investments, because technically they were not bonds issued by an oil or pipeline company (bad ESG) but by an investment company (good ESG, or at least neutral). Even though ‘Pipelines’ is right in the name. But ‘Green’ is in the name first. If you were an extremely careless ESG investor — and it is arguably rational to be an extremely careless ESG investor? — you might look at that name, see the word ‘Green,’ stop reading before you got to ‘Pipelines,’ and buy the bonds. I guess.”
The public and investors aren’t alone – company executives and board members can also be overly-influenced by the words “green” or “sustainable.” They may be misled by vendor/supplier claims or choose strategies that use the words inappropriately or create inaccurate expectations. As ESG advisors and staff, it is incumbent upon you to be a check and balance on these things. Not only do you need to continually educate your executives/directors about ESG/sustainability matters, but you also must push back against bad ideas when they come up. The sooner the better, too – otherwise the company may make “green” or “sustainable” commitments that simply aren’t.
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