A Guide to Identifying "Impact Washing" by Asset Managers

To be an effective impact investor, you have to be good at identifying impact washing. "Impact washing" takes place when parties make misleading claims about the impact of an activity. Within investing, it occurs when an asset manager misrepresents the non-financial benefits of its investment strategy. Impact washing is often discussed in the impact investing community and there appears to be broad agreement that it is common, but it is usually discussed in abstract terms. The challenge lies in that there are no industry agreed definitions of what constitutes impact washing, except in the most egregious circumstances of funds misrepresenting their holdings or processes. We think that impact washing in investment management goes well beyond this.