The former head of sustainable investment at the world’s biggest money manager has warned that ethical investing has “little to no impact” on the environmental and social causes that companies claim to support.
Tariq Fancy, who was BlackRock’s chief investment office for sustainable finance until 2019, said the private sector has found ways to convince the public that it can help solve the climate crisis despite its products having negligible impact on the environment.
Speaking to BBC Radio 4’s Today programme, he said: “Having sat at the middle of the machine of the largest [asset manager] in history I can tell you quite confidently that the vast majority of what they’re saying doesn’t really add up.
“The vast majority of the products that they’re selling have little to no demonstrable impact on the environmental and social causes that they invoke in their marketing.”
His comments come as financial services firms increasingly attempt to brandish their ethical credentials by selling products that they claim to be environmentally friendly and ethical.
The boom in ethical investing has been fuelled by fast-changing attitudes and huge green stimulus by governments.
However, Mr Fancy hit out at what he dubbed the “sustainababble” coming out of Wall Street, adding that experts point to the need for policy reform at government level to fight climate change.
He added: “We need to jettison this viewpoint of the world that competitive markets don’t need government acting as referees. It’s as illogical as saying a competitive sport doesn’t need referees because the players will self-referee.
“Across the economy and financial markets, too much capital is going towards companies that are doing things not in the public interest.”
On Monday, several major UK investment houses, including Schroders, failed to meet the standards of a new ESG code for those investing on behalf of savers and pensioners.
The UK’s accounting watchdog said of the 189 companies with £32 trillion of assets under management that applied, one third were not approved.
BlackRock was contacted for comment.