Business Daily – "How ethical is 'ethical' investing?"

BBC World Service | Host: Megan Lawton | Air Date: February 17, 2026

Episode Overview

This episode investigates the world of ethical investing, with a focus on ESG (Environmental, Social, Governance) criteria—unpacking whether "ethical" investments are as principled as they claim. Host Megan Lawton, reporting from Toronto's financial district, speaks with industry experts including investment campaigner Adam Scott, sustainability consultant Lindsay Hampson, and regulatory official Grant Vingo. The discussion spans the surging popularity of ESG, the challenge of distinguishing between genuine ethics and “greenwashing,” regulatory advancements, and the impact of political and regulatory shifts, particularly in North America.

Key Discussion Points & Insights

What is Ethical (ESG) Investing?

• Definition and Principles

  • Bruce Sellery [01:44]: "Ethical investing is an investment strategy where your values can come into play. Your moral values, your social values, your religious values, and those become a really important criteria for selecting your investments. It's obviously really, really subjective. There's no rule book."
  • ESG involves filtering out companies whose practices clash with personal values—such as those producing tobacco, weapons, or fossil fuels.

• Popularity in Canada

  • Megan Lawton [02:09]: "Around 7 in $10 managed by Big Canadian investment firms now include some kind of responsible investing strategy."
  • Canada is considered a leading market for responsible investment, though the path is "not always straightforward."

The Reality of Ethical Investing

• Institutional Lag and Systemic Challenges

  • Adam Scott [03:31]: "There are quite a few people working in the financial sector here in Toronto who care about these issues…But the institutions as a whole are actually quite large and slow moving and very behind in terms of trying to sort out some of these issues."
  • Organizations may aspire to ESG, but actual change is often sluggish.

• Subjectivity and Personal Impact

  • Bruce Sellery [04:49]: "For an individual investor...you're building a nest egg so that when you're no longer drawing a paycheck...you've got some money for groceries in your fridge. And the reason you invest is because you want high a return as possible."
  • Ethical investing balances personal values with long-term financial returns.

• Investor Influence on Company Behavior

  • Bruce Sellery [05:39]: "Our focus as investors on ESG does make a significant difference…institutional investors…had made requirements or made demands of companies to change their behavior and improve the way that they engage on those three things."
  • Institutional pressure has led companies to respond to ESG demands.

ESG from the Business Perspective

• Demands on Supply Chains

  • Lindsay Hampson [07:57]: "Their company usually has nothing to do with the environment, but their largest customer is asking them…Nestle, General Motors, Amazon, Google, Walmart…the largest companies in the world are making these commitments publicly and they're pushing this down on their suppliers."
  • Even smaller companies find themselves compelled to meet rigorous data and sustainability requirements.

• Practical Steps for Businesses

  • Lindsay Hampson [08:40]: "I always start at the basics. I ask them, do you just pay your energy bills or have you actually ever tried to reduce your energy consumption?...Let's get some baselines."
  • Building ESG credentials starts with establishing baseline metrics.

• Long-term Resilience

  • Lindsay Hampson [09:08]: "A company that's going to last for a really long time, they can’t just have blinders on…Our supply chains are being shocked, there's crazier weather...So the reason it's come up is any business…you have to be thinking about how the environment may impact you."

The Problem of Greenwashing

• Transparency and Regulatory Action

  • Adam Scott [11:40]: "That's why the transparency is so key. These people are working for us on our behalf… but they often don't provide very high level of information on how they're doing that."

  • Lack of standard definitions and clear disclosures fuels greenwashing—the practice of overstating environmental credentials.

  • Adam Scott [12:51]: "Greenwashing is the practice of making misleading statements about how green a particular investment or company or activity is. And it is widespread around the world… a very large barrier towards actually having ethical and responsible investments exist because the average person just cannot tell whether or not an investment is ethical."

• Recent Regulatory Changes in Canada

  • New legislation now requires companies to substantiate environmental claims.
  • Megan Lawton [14:16]: "Earlier this year…RBC said it would drop its goals around sustainable finance after the Canadian government updated the Competition act, tightening the rules around environmental claims and making companies prove what they say."

Role of Securities Regulators

• CSA Enforcement

  • Grant Vingo [15:07]: "We observed it on a fairly widespread basis where there was a lack of clarity around definitions…we were paying attention to the issue and…imposing stronger standards."
  • CSA has begun enforcement against egregious or persistent greenwashing cases.

• Label Ambiguity

  • Grant Vingo [16:41]: "There's still a use of just general terms like green, ethical, sustainable that don't have precise definition that in fact can be somewhat difficult across many different companies to define."
  • Generic ESG labels may be meaningless without evidence.

• Consultant’s Rule of Thumb

  • Lindsay Hampson [17:05]: "Okay, this is my favorite quote. If you can't measure it, it's probably marketing. If I can't see their baseline data…then it's probably marketing."
  • Actual progress demands measurement, not just branding.

Political and Market Headwinds

• Political Backlash (especially in the US)

  • Bruce Sellery [17:35]: "The EPA under Administrator Lee Zeldin announced…actions seeking to roll back key environmental regulations."
  • Following political change in the US, regulations on climate and diversity are being loosened, affecting ESG trends.

• Corporate Response to Political Environment

  • Bruce Sellery [18:18]: "Given the political times… it is way less palatable for companies to talk publicly about their equity, diversity and inclusion efforts. This is the S of esg…a lot of negative comments about edi [equity, diversity inclusion]."

• Risks for Investors

  • Bruce Sellery [19:09]: "It could well be that those investments that they have put their hard earned money in don't return what they had hoped…Listen, it could be that some of them fail and that's that's the game of investing…You have the potential for a higher reward, but you are also taking higher risk."

Memorable Quotes

• "Ethical investing is an investment strategy where your values can come into play."
  —Bruce Sellery [01:44]

• "If you can't measure it, it's probably marketing."
  —Lindsay Hampson [17:05]

• "Greenwashing is the practice of making misleading statements about how green a particular investment or company or activity is. And it is widespread around the world..."
  —Adam Scott [12:51]

Important Segment Timestamps

• 01:16 — Megan Lawton sets the scene in Toronto and introduces the concept of ethical investing
• 02:09 — ESG’s scale in Canada and initial complications
• 03:31 — The challenge of institutional inertia (Adam Scott)
• 04:43–05:39 — The subjective nature of ethical investing and its personal significance (Bruce Sellery)
• 07:57 — ESG requirements on suppliers and small businesses (Lindsay Hampson)
• 11:40–12:51 — Importance of transparency and definition of greenwashing (Adam Scott)
• 14:16–15:07 — Regulatory changes tighten greenwashing rules (Megan Lawton, Grant Vingo)
• 17:05 — The "measurable or marketing" litmus test (Lindsay Hampson)
• 17:35–18:45 — Political backlash and ESG retrenchment in the US (Bruce Sellery)
• 19:09 — Risks to investors as ESG faces new hurdles (Bruce Sellery)

Tone and Language

The episode maintains a candid, informative, and accessible tone. Experts speak plainly about both the promise and pitfalls of ethical investing, using relatable examples and analogies (“business-minded tree hugger,” “blinders on”).

Summary

This exploration of ESG investing reveals a field filled with promise, pitfalls, and political complications. While Canada continues to advance ESG principles, driven by investor demand and regulatory tightening, both large and small businesses struggle to meet evolving standards without falling back on marketing spin. Experts agree that transparency, concrete evidence, and robust regulation are essential to ensuring ethical investing is more than a label. However, in the face of political headwinds and vague definitions, vigilance—by investors, regulators, and the public—is more crucial than ever.