Green impact or greenwashing?

Website Disclaimer October 2024

Important Legal Information & Terms of Use

By using the Cape Capital website (“Website”), you declare that:

You are a qualified investor according to Art. 10 para.3 of the Swiss Collective Investment Scheme Act (CISA) and/or a professional or institutional investor according to Art. 4 of the Financial Services Act (FinSA).
You are domiciled in Switzerland
You have understood and agree to the following Important Legal Information and Terms of Use (together “Conditions”)

By clicking “Accept all” you acknowledge and accept the following Important Legal Information and Terms of Use:

‍

About this Website

‍

The content of this Website (including microsites) has been prepared by Cape Capital AG, with its registered address at Utoquai 55, 8008 Zurich, Switzerland (“Cape Capital”), duly registered at the commercial register of the Canton of Zurich with number CHE-109.617.147. and contains the views and opinions of the particular individuals and is for general information and marketing purposes only. All copyrights and other rights, included but not limited to logos and registered trademarks relating to the entire content of the Website are reserved exclusively to Cape Capital or the specifically designated right holders. Any use, in particular the reproduction or publication in full or in part is permitted only with the prior written consent of Cape Capital. Cape Capital may from time to time suspend the operation of this Website for repair, maintenance or improvement work, or in order to update or upgrade its content or functionality. Cape Capital may also change the format, content and/or access of this Website at any time at its sole discretion without notice. Although Cape Capital believes that information provided on this Website is based on reliable sources, content on this Website is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. Therefore Cape Capital cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained herein. Unless otherwise stated, the numbers/figures on the Website are unaudited.

‍

Regulatory Status & Ombudsman

‍

Cape Capital is a regulated asset manager of collective assets according to the Federal Act on Financial Institutions of 15 June 2018 (FinIA) and supervised by the Swiss Financial Market Supervisory Authority FINMA, Laupenstrasse 27, CH-3003 Bern, Switzerland (FINMA). The Website contains information about various collective investments (“Funds”) which may have been registered or otherwise notified for distribution and marketing in the jurisdiction you have selected. Please note, that such registration or notification does not mean that the Funds are suitable for all investors and their investment objectives, financial situation and risk profile. As an asset manager of collective assets, Cape Capital is, among others, subject to the rules under the Swiss Financial Services Act (FinSA), the Swiss Collective Investment Schemes Act (CISA) and the Swiss Financial Institutions Act (FinIA).Cape Capital is affiliated to the following Ombudsman according to FinSA: Finanzombudsstelle Schweiz (FINOS), Talstrasse 20, CH-8001 Zurich, Switzerland. For further information, please refer to the General Client Information Document available on the Website which forms an integral part of these Conditions.

‍

No Solicitation, Offer, Recommendation or Advice

‍

Nothing contained on this Website constitutes a solicitation, an offer or a recommendation to buy or sell any Cape Capital Funds or other financial instruments, nor does it constitute any form of personal investment advice which takes into account your personal circumstances. Cape Capital does not provide investment, legal, tax or other advice through this Website and nothing herein should be construed as such advice. Cape Capital does not represent that any Cape Capital collective assets or financial instruments mentioned on this Cape Capital website are suitable for any investor. Investment or other decisions should be made solely on the basis of the relevant product and/or service documents (prospectus/offering memorandum, fund contract/articles, key information documents, financial reports) of the respective collective investment. If not a Cape Capital client, it is strongly recommended to contact a professional financial advisor, tax consultant or other qualified expert in order to determine whether an investment in a Fund or other financial instrument corresponds to the specific requirements and preferred level of risk of the investor.

‍

US Persons

‍

Any collective investment schemes mentioned on this Website may, unless explicitly stated otherwise, not be offered, sold or delivered to United States (U.S.) citizens or persons resident or incorporated in the U.S. and/or other natural or legal persons whose income and/or returns, regardless of origin, are subject to U.S. income tax, as well as persons who are considered to be U.S. persons pursuant to Regulation S of the U.S. Securities Act of 1933 and/or the U.S. Commodity Exchange Act, in each case as amended from time to time.

‍

Risk Considerations

‍

The provision of financial services and investments in Funds and other financial instruments involve opportunities but also bear risks, including the risk that the value of investments and the income therefrom may fall or rise and investors may not get back the full amount invested or may even lose all of their investment. Investors should ensure to have fully understood such risks before taking any investment decisions. Cape Capital strongly advises to consult the brochure “Risks Involved in Trading Financial Instruments” of the Swiss Bankers Association (SBA) as well as the relevant documents of the respective Fund or financial instrument and to seek professional investment advice before taking any decision to invest. Investors should note, that these Conditions do not represent a complete statement of risks associated to a Fund or a financial instrument. Past performance is no indication of current or future performance. Performance data do not include commissions and costs incurred by investors when subscribing or redeeming Fund shares.Investments, in particular collective investments in private equity, venture capital and other illiquid assets involve an above-average degree of risk, including the risk that losses may even exceed the original investment and should be seen as long-term in nature.

‍

No Warranties

‍

The use of this Website, including any information accessed, downloaded or otherwise obtained through the Website is at your own risk. This Website, together with all content, information and materials contained therein, is provided “as is” and “as available”, without any representations or warranties of any kind, whether express or implied, with respect to the Website, and all information and functionalities contained therein.

‍

Limitations of Liability

‍

IN NO EVENT SHALL CAPE CAPITAL BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES (INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF DATA, BUSINESS OR PROFITS) ARISING OUT OF OR IN CONNECTION WITH THESE CONDITIONS, THIS WEBSITE, THE INABILITY TO USE THIS WEBSITE OR ANY INFORMATION OBTAINED OR STORED THERFROM. Cape Capital excludes any liability for any loss, damage or alteration of any kind including but not limited to transmission to losses, delays, misunderstandings, unauthorized interception by third parties, duplication or fraud, except in the event of gross negligence on the part of Cape Capital. Any transmission or download of information is entirely at your own risk.

‍

Use of Links

‍

The hyperlinks on the Website are only provided for information and convenience purposes. Cape Capital is not responsible for the content of external websites that link or are accessible from this Website. Cape Capital does not assume any responsibility or liability with respect to any website accessed via this Website. Please note that when you click on any external website’s hypertext link you will leave this Website. You should review the privacy statements of such websites carefully before you provide any personal or confidential information.

‍

Electronic Communication Channels

‍

The use of electronic communication channels, in particular unencrypted e-mails and text messages, is associated with various risks which may include, but are not limited to, the risk of transmission errors, alterations or duplications, the risk of interception or manipulation of content and the risk of introducing malicious software (malware) by unauthorized third parties. By using such electronic communication channels, you accept these risks and agree to bear any resulting losses or damages.

‍

Data Protection and Privacy Settings

‍

Cape Capital has established a Cape Capital Privacy Notice, which forms an integral part of these Conditions. It explains how personal data is collected and processed at Cape Capital, including this Website. Cape Capital uses cookies to personalize and improve site experience. You can at any time change or withdraw your consent from the Cookie Declaration on the Website. Your consent applies to the following domains: capecapital.com. Your current state: Consent accepted or Consent rejected. Manage your consent.

‍

Applicable Law and Jurisdiction

‍

The access and use of this Website, and these present Conditions are governed by substantive Swiss law with the exclusion of the conflict of law principles. The place of jurisdiction is Zurich, Switzerland.

Last Update: October 2024

Your preference will be securely stored for the next 30 days.

Decline Accept All

To access the website, the terms and conditions need to be accepted.

View terms

Preferences

This Cookie Policy explains what cookies are and how we use them, the types of cookies we use i.e, the information we collect using cookies and how that information is used, and how to control the cookie preferences. For further information on how we use, store, and keep your personal data secure, see our Privacy Policy. You can at any time change or withdraw your consent from the Cookie Declaration on our websiteLearn more about who we are, how you can contact us, and how we process personal data in our Privacy Policy.Your consent applies to the following domains: capecapital.com

Accept all cookies

Thank you! Your submission has been received!

Oops! Something went wrong while submitting the form.

Companies often cover up greenwashing with misleading language, vague certifications and superficial actions. Cape Capital’s Impact Investment Specialist Alexandre Micheloud on separating true sustainability efforts from empty promises.

Almost ten years ago, I took the trip of a lifetime through Southeast Asia. Much of what I saw was breathtaking: the white sands of Halong Bay, lush jungle canopies in Indonesia. But some sights were more jarring. Pristine beaches were littered with plastic bottles, and rubbish bags hung from rainforest trees. According to Our World in Data, Asia still accounts for 80% of the plastic refuse that washes up in the ocean. All too often, mismanaged waste finds a direct path to the sea through its vast river networks. The scale of the problem had a visceral impact on me, and since then I have dedicated my career to solving global environmental challenges, which in the last few years has meant helping clients align their capital with purpose. But distinguishing genuine green impact from surface-level change can be frustratingly difficult.

‍

‍

Under the cover of greenwashing

‍

There have been some well-publicised cases of outright deception. In 2015, Volkswagen was charged with cheating emissions tests, in a scandal that cost the firm $35bn in fines. This was fortunately an extreme case, but subtle misrepresentation is far more common. Some purportedly sustainable funds load up on tech companies, which have relatively low carbon footprints due to their “dematerialised” operations. This might satisfy sustainability guidelines on paper, but delivers limited real-world environmental benefits. Investors can be disappointed to find that their ‘green’ investments have actually had very little tangible impact on climate change.

‍

The same ambiguity can be found in the ‘environmentally friendly’ products that we use on a day-to-day basis. On a recent ride in my father’s car, I noticed it had a ‘green’ mode. This sounded virtuous, but on closer inspection, promised no concrete reduction in emissions or efficiency gains. We see similar problems with labels like ‘organic,’ ‘eco’ and ‘ethical’ – vague terms that often have different connotations in different territories. Certifications can be another trap, and only carry weight if the accrediting body has real clout.

‍

‍

Cherry picking data

‍

Firms can also cherry pick data when it comes to emissions reports. Companies classify their emissions under three categories. Scope 1 emissions are greenhouse gasses that an organisation emits from its operations, while Scope 2 derive from its energy consumption. Scope 3 emissions arise from activity across the firm’s value chain, both upstream and down. This can include the embedded emissions in the materials purchased from suppliers and the emissions resulting from consumers using the end product.

‍

Scope 3 emissions often make the biggest contribution to a firm’s overall carbon footprint, but are frequently underreported or ignored. An oil company might boast of a 5% reduction in its Scope 1 emissions through more efficient drilling. This sounds impressive, until you realise that Scope 3 emissions (arising from the actual oil consumption, which can represent over 80% of its total) remain unchanged.

‍

A tougher backdrop

‍

It might be tempting to think that appetite for sustainable investing is waning, especially now that the economic backdrop is less benign. Back in 2022, higher interest rates dented earnings forecasts, creating headwinds for tech-heavy ESG funds and alternative funds. At the same time, consumer cutbacks have weighed on sales for sustainability-focused firms. Yet the case for genuine ESG is robust. Climate change exposes firms to transition risks from regulatory shifts, carbon taxes and reputational issues. Scientists also anticipate more frequent extreme weather events, with summer wildfires across Europe a grim reminder of what is at stake.

‍

In this context, sustainability isn’t just about doing good – it’s about building resilience for the future.

‍

Higher temperatures are associated with lower worker productivity, and institutions such as the European Central Bank and the Financial Stability Board warns that climate change could increase inflationary pressure over the next 10 years. They are also alert to financial stability risks associated with climate and biodiversity-related losses in the financial system. In this context, sustainability isn’t just about doing good – it’s about building resilience for the future.

‍

Enforcing high standards

‍

How do we distinguish greenwashing from truly purposeful change? Evidence that a company is meeting environmental targets is a good sign – but not all frameworks are equal. As any Swiss person might know, Minergie standards for reducing emissions and energy use in renovated buildings are famously stringent. By contrast, frameworks like the Science Based Targets Initiative (SBTI) guidance on greenhouse gas emissions are far less rigid.

‍

Third-party verification is also important: the best accreditations are scrutinised by experts in the industry and rigorously audited. Benchmarking against peers is also a good sign. Given that Environmental, Social and Governance (ESG) helps firms to stay competitive in a changing world, industry leaders should face lower reputational risks. Companies investing in change today will likely be more agile tomorrow.

‍

Looking to the future

‍

Analysing a firm’s historical data is important, but so is scrutinising its future pipelines. While hard to abate industries like cement production will remain vital in the future, they need to be adaptable in the face of growing regulatory pressure. Looking at research and development pathways can help us to spot which companies are best positioned to seize transition opportunities and grow their future market share.

‍

Evolving AI technology can also help sharpen our view ahead. Natural language processing tools can detect vague or inconsistent language in company filings. AI models can track how a firm’s ESG language evolves over time, and screen for any controversies in the press. Satellite imagery is another valuable tool, allowing close range views of environmental damage and deforestation. This is especially useful in holding firms to account for upstream and downstream Scope 3 impacts that they might hope to overlook.

‍

ESG as a strategic move

‍

When sustainability is such an important risk management tool, cutting through greenwashing matters. In China for instance, a change in government policy in 2011 reshaped global solar panel supply chains, demand patterns, and pricing. The country is now a leader in the field, and accounts for over 80% of global production. This wasn’t a moral choice, but a strategic move for long-term success. While interest rate cycles and political terms are short-lived, climate risks need to be navigated over the long term.

‍

In this article

Written by