The ESG Phenomenon: UK Watchdog Reportedly Frowns On HSBC

Editorial Staff 6 May 2022

The ESG Phenomenon: UK Watchdog Reportedly Frowns On HSBC

The latest developments and controversies in ESG.

HSBC, Advertising Standards Authority
The dangers of firms exaggerating their supposed environmental policies – known as “greenwashing” – are damaging the goal of cleaning up the planet, industry figures say. The latest controversy linked to HSBC has added to the theme. 

Various media reports (Financial Times, others) said that the UK/Hong Kong-listed bank is due to face accusations of greenwashing from the UK’s Advertising Standards Authority over recent adverts regarding its role in the climate change crisis. The campaigns allude to climate action by the bank while omitting data about its own emissions. 

At the time of this news service going to press, the ASA had not made an announcement about what it might do. 

If the watchdog, which regularly slaps down misleading advertising, issues an official warning, it will be the first time that a large bank has been scolded for incomplete claims about its environmental policy claims.

“Greenwashing does more harm than good. In reality, when companies exaggerate or greenwash their social or environmental responsibility, they actively slow progress towards global climate change,” Kate Gee, counsel at specialised commercial disputes law firm Signature Litigation, said.

“Greenwashing adverts confuse customers and mask the true impact of a company on the planet. The misleading HSBC adverts gave the appearance of the bank as part of the solution to the climate change problem, rather than – as one of the world’s biggest financiers of fossil fuels – part of the problem itself.  It is encouraging to see the ASA calling out this behaviour and I expect this scrutiny to continue,” Gee said. 

HSBC has reportedly commented (source: Green Queen, 5 May) that its advertising claims should be taken in an isolated context and that consumers would not regard them as a wider declaration of green credentials. 

Around the world, the “greenwashing” theme is a problem for wealth managers and others promoting the idea of environmental, social and governance-themed (ESG) investing. If banks, asset managers and others exaggerate or distort what they say they are doing, it will foster distrust and public cynicism. At the same time, it also fuels worries that some “green” objectives, such as achieving net-zero carbon emissions by a certain date, aren’t realistic – a situation highlighted by surging energy bills.

Reports have said that the ASA is concerned about two bus stop posters showcased in Bristol and London in October last year. Both received complaints about misinformation. 

HSBC continues to claim in its corporate material that it is focusing on reducing carbon emissions. On its website, for example, a 16 March press release states: “HSBC Holdings plc today announces plans to continue our leadership on climate change and outlines three steps we will take to turn our net-zero ambition for our portfolio of clients into business transformation across the bank.”

In August 2021 media reports said US regulators were probing Deutsche Bank's asset management business, DWS Group. The firm’s former head of sustainability said that it had exaggerated how it used sustainability measures to manage assets. DWS strongly rejected the allegations.

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