Greenwashing Risk Is Much Less Than Bond Buyers Fear, S&P Says

In the lemming-like rush to sustainable finance, well-intentioned investors worry that their money won’t actually have the environmental or societal benefits claimed by borrowers.

But this fear of so-called greenwashing may be misplaced in the market for bonds that fund environmental, social and governance projects, according to S&P Global Ratings.

“Be vigilant, but don’t necessarily be paranoid,” said Mike Wilkins, S&P’s senior research fellow for sustainable finance. “We haven’t found any evidence of widespread greenwashing -- or sustainability-washing -- in the sustainable debt markets,” London-based Wilkins said in a phone interview on Wednesday.

Inconsistency in bond labeling and a ...