Green finance is on the rise. In the last ten years, the number of funds sold by Swiss banks with the "sustainable" label has tripled. However, these investments are less green than they seem. Investigative journalists Marie Maurisse and François Pilet have screened hundreds of investments described as "climate and environmentally responsible". The documentary The Sirens of Green Finance, screened in Geneva on Wednesday 9 March as part of the International Film Festival and Forum on Human Rights (FIFDH), presents the results of their investigation for the first time.
The screening was followed by a debate, co-presented by the RTS and the organisation Public Eye, in which the explorer Bertrand Piccard, co-founder of Swiss Sustainable Finance, Angela De Wolff, and the vice-president of the foundation La fabrique écologique Lucile Schmid took part.
Why it matters. Sustainable finance has seen a spectacular boom since the signing of the Paris agreement in 2015. Five years later, the Bank for International Settlements counts $35,000 billion invested in green funds – the GDP of the US and Europe combined. Yet, from green investments to pension plans, citizens' savings sometimes contribute to questionable projects.
Toxic waste heaps abandoned in the Cévennes, France, by a company claiming to be a “model of sustainability”, indoor ski resorts in the middle of the Egyptian desert (with imported penguins), oil and air transport companies described as “green” are some of the examples that the two journalists came across while scouring the list of so-called green investments.
Where are the good examples? Swiss explorer Bertrand Piccard is featured in the documentary because his Solar Impulse Foundation promotes a sustainable fund that invests in the Belgian former mining company Umicore. During the debate, he praised the investigative work of the journalists but criticised them for not offering alternatives that could serve as good examples:
“It is necessary to condemn the dishonest, but the film does not show the companies that make real efforts. Funds specifically target firms that offer real solutions, especially in private equity, by investing in private companies rather than listed ones.”
Angela De Wolff from Swiss Sustainable Finance agreed: “It's quite negative and it's almost unfortunate because to some extent it discredits the whole industry. Today in Switzerland there are over a thousand sustainable funds. Let's not forget the progress the sector has made over the last twenty years.”
Journalist François Pilet defended his work: “Even when we looked into the best sustainable fund of the year 2021, we found investments in Total, Easy Jet, Peugeot, Paris and Frankfurt airports...”
“This investigation shows that the control system for sustainable funds in Switzerland is dysfunctional to the point that ‘green’ labels cannot be trusted. In the food sector, you cannot finance pesticides with an organic label. The world of green finance escapes these strict regulations. Ensuring that these investments are truly environmentally friendly would require citizens to scrutinise every detail of every fund. But not everyone has that kind of time.”
On the film’s approach, Marie Maurisse said:
“We were interested in the sustainable products that most banks offer to the public. The good examples suggested by Bertrand Piccard are very specific, and often addressed to a fringe of the population with the resources, the savings and the time to invest in private companies.”
When the Swiss pension fund AVS finances global warming. “We also wanted to show that even people who want to escape the stock market system are caught up in it and sometimes unknowingly support fossil fuels via their pension fund,” explained Maurisse.
In Switzerland, the public body CompenSwiss invests the AVS’s CHF 37bn in the stock market. The journalists spotted:
CHF 122 million in coal stocks and bonds,
CHF 300 million in the automobile sector,
and CHF 1bn in aviation.
François Pilet added:
“We are made to feel guilty for taking the plane, and then we notice that both the green funds and the old-age insurance finance the aviation sector. It's the world upside down.”
‘Sustainable’, a catch-all label. “We are still far from having a restrictive definition of what is sustainable,” explained Maurisse, pointing out that the European Commission recently labelled gas and nuclear power as green energy. Angela de Wolff admitted that the financial system is currently faced with “an absence of standards” with a “definition of what is sustainable that varies from one investor to another”.
“We use terms without having defined their content beforehand,” said Schmid from La Fabrique écologique. “We can see that there is the reality of climate change and, on the other hand, a world of artefacts that cannot be linked to reality.” She called for more binding regulation of the system:
“We clearly cannot rely exclusively on self-regulation because there will always be this temptation of green marketing which is profitable at the moment.”
For Maurisse, one way forward would be to generalise an exclusion policy. Proposed by the French NGO Reclaim Finance, it requires banks to totally renounce certain sectors, such as coal, in their investment funds:
“At this stage, this logic of exclusion is extremely limited to the UN criteria and concerns mainly arms manufacturing firms. Extending this principle to the worst environmental categories could be the first step.”
Ex-polluter pays. The discussion then turned to the responsibility of companies, which, despite claiming to be green today, have a history of polluting. Who will pay for the mountains of toxic waste left behind by Umicore, which still causes cancer to the residents of the Cévennes?
For Bertrand Piccard, whose foundation is investing in Umicore via a fund dedicated to sustainable development, the taxpayer will have to pick up the tab:
“We can't just point the finger at one culprit. We are all responsible through our consumption. My vision of ecology is a transition from an old, polluting, dangerous world to one that we hope will become clean, efficient and humane. Today, this company has shifted its focus to renewable energy and mineral recycling. To ask it to pay for the mistakes of its former managers would be to force a now exemplary company to close its doors.”
A young girl in the audience reacts, standing up and calling out to the explorer:
“I am 25 years old, is it up to me to finance the pollution that took place before I was even born?”
For Lucile Schmid, “we are dealing with a company that is flouting the polluter-pays principle and should be prosecuted. It's not just a question of history, but of runoff of toxic waste that will poison the Cévennes region for a long time to come. It is a denial of powerful’s responsibility towards the weak.” She recalled:
“We are not discovering the climate emergency. In 1972, the Meadows Report already warned of the global limits of growth. Political and economic leaders have consciously chosen to continue to enrich themselves through productivity.”
Financing polluters? For de Wolff, the contradictions can also found be in Switzerland:
“We criticise this ski resort in Egypt. Yes, it may seem scandalous, but in Switzerland too there are 200 indoor ice skating rinks that remain open in summer. The principle of a green bond is to reduce the negative externalities of companies. The least bad solution is to accompany this ski resort so that it improves its energy efficiency and reduces its environmental footprint.”
Pilet argued back:
“This logic amounts to saying that we should only finance polluting companies, because one day they may become virtuous and we should finance the transition. Decarbonised aircraft do not exist today, however airlines are already receiving funding from sustainable investors.”
For Piccard, “it should be possible to finance the good part of the bad companies”, to which Schmid replied:
“We need to put common sense back at the centre of the game by stopping dissociating the financed project from the company's overall activity. Instead, let's value those companies that go further than micro-projects and whose commitment is based on respect for the environment.”
The documentary The Sirens of Green Finance will soon be broadcast on the RTS show “Temps présent”.