Also sometimes referred to as “Green Washing,” Impact washing is when the social and/or environmental benefits or “impacts” of an investment product or service are exaggerated or made up in order to sell more of it. Investment managers might be tempted to “impact wash” or “green wash” their funds or services because they can use the impact or green label to charge higher management fees.
Impact washing is possible because most people don’t know what sustainable investing is or how it differs from impact investing. Sustainable investing is also based on things that aren’t always objective and can be open to interpretation or hard to measure.