Sustainable Investing

Frequently Asked Questions

What is Greenwashing?

Greenwashing is the practice of companies making misleading environmental claims for marketing purposes without following through with their pledges. In doing so, companies aim to improve their reputation, to attract environmentally and socially aware consumers and investors and, in turn, to increase profits.

As more companies jump on the ‘sustainable’ bandwagon, washing is becoming increasingly common, so it’s important for investors must conduct thorough due diligence on the companies and funds they are considering. This may involve reviewing third-party ESG ratings, examining a company’s sustainability reports and scrutinising the portfolio holdings of ESG focused funds.

What is Net Zero?

There is no single definition of “net zero”, so not every target that organisations set is the same. Some talk about becoming “carbon negative” or “climate positive” (in other words, they are removing carbon from the atmosphere). Others talk about becoming “net zero” or “carbon neutral” (they are offsetting their CO2 emissions via other projects, such as tree planting). Others talk still about becoming “climate neutral” (they are referring to all greenhouse gases, not just CO2). This vast array of terminology can be confusing.

What are Scope 1, 2 and 3 Emissions?

When organisations talk about Scope 1 emissions, these are emissions that come directly from their own operations. Scope 2 emissions are indirect emissions from the generation of their purchased energy. Scope 3 emissions are emissions from end-users, which these can be much larger than Scope 1 and 2 emissions combined.