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Lachie McLean on responsible investing and financial greenwashing

Monday 28 November 2022 9:29am

Lachie McLean image.jpg

Recent Otago Business School alumnus, Mr Lachie McLean, shares his research on responsible investment practices and why he attended the Otago Business School, ahead of this year’s Assembly of Investment Chairs (AOIC).

Taking place Tuesday 29 November at the PwC Tower in Auckland, McLean will be speaking to the AOIC’s theme for this year event, ‘greenwashing, climate disclosures and impact investment’.

“The AOIC presents a significant opportunity to discuss challenges and opportunities in investing in the context of creating real world impacts,” McLean says.

“The event is also unique as it caters towards the investment decision makers from a range of Iwi and not-for-profit organisations, making it the perfect platform for me to share my research findings from my time at the University of Otago.”

McLean is currently working as an Investment Banking Analyst at Jarden in Auckland, where his days include advising listed corporates and private equity clients on mergers and acquisitions, alongside raising equity and debt capital through public markets.

He describes the role as “fast-paced” and “analytical”, where he is exposed to a variety of Australasian industries and is increasingly able to apply the knowledge he gained during his Master’s research.

McLean’s research investigated responsible investment practices and greenwashing within Australasian global equity funds that were available to retail investors like everyday citizens.

“Initially we surveyed a sample of fund managers to elicit an understanding of how and why they integrate Environmental, Social and Governance considerations into the investment decision-making process,” McLean says.

“From there we evaluated whether these fund managers were as responsible as they claimed to be by comparing the survey responses to the portfolio holdings data of each fund where several interesting findings came up.

“We found that, firstly, responsible investing is primarily driven by performance-focused value and attracting investment flows, rather than ethical values and responsibilities. Secondly, that climate change themes were prioritised comparatively more than other themes. Thirdly, that a portfolio’s carbon intensity was significantly higher for respondents that were members of a climate initiative, and not significantly different for those that prioritised climate change themes or engaged in a decarbonisation strategy.”

He goes on to say that these findings demonstrate that, as responsible investing sweeps the asset management industry, a record number of financial products are being classified as ‘sustainable’ or ‘ethical’, yet it is often unclear what fund managers are doing to align their words and actions.

McLean is concerned that ethically motivated investors may be unable to differentiate between greenwashing funds and genuine “responsible funds” because they possess less information about the quality of sustainable investment claims.

He believes that regulatory oversight and reporting standards need to be established to hold fund managers accountable for the claims they make and their motivations.

“Through this research, my knowledge of sustainable finance has grown significantly, and I have found that this area is becoming increasingly relevant in my current job,” McLean says.

“I was glad to attend the University of Otago not only for what my research outcomes there have meant for my career, but also because the student-centred atmosphere offered a diverse experience unlike any other university.”

During his time at Otago, Lachie completed his undergraduate degree, a Master of Finance degree and, in 2020, received the Prince of Wales prize which recognises the most outstanding undergraduate student at the University, before he moved to Auckland to join the team at Jarden.

- Kōrero by the Otago Business School Communications Adviser, Kelsey Schutte.

Lachie McLean paper: In Holdings we trust: Uncovering the ESG Fund Lemons
Assembly of Investment Chairs (AOIC)
Jarden

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