How ethical is “ethical” investing?

Summary

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

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

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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.

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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."

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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]

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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)

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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”).

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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.

Transcript

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[Megan Lawton]

Hello and welcome to Business Daily on the BBC World Service. I'm Megan Lawton coming to you today from Canada and the heart of Toronto's financial district. It's home to vast skyscrapers, people in smart suits and some of the country's biggest banks. In fact, it's North America's second biggest financial center after New York. And it's here that we're starting our journey into the world of ethical investing.

[Bruce Sellery]

Ethical investing is an investment strategy where your values can come into play.

[Megan Lawton]

Often called ESG investing, that's environmental, social and governance. It's big business in Canada.

[Adam Scott]

I think Canadians actually care about these issues. If you pull the average Canadian, they really do care about ethical investment. They care about social and governance issues and they really care about the climate.

[Megan Lawton]

In fact, the country is considered a major player. Around 7 in $10 managed by Big Canadian investment firms now include some kind of responsible investing strategy. That's than in the US and Europe. But even here things aren't always straightforward. This year Canada's largest bank, the Royal bank of Canada, dropped its sustainable finance targets.

[Bruce Sellery]

There are some companies who continue to pursue ESG very aggressively and others that have taken a step back.

[Megan Lawton]

Today we're getting to the bottom of what's just clever marketing and what's genuinely ethical. I mean, how easy is it for example, to find truly green investments.

[Lindsay Hampson]

It's not as easy as you'd think it is. Right, because there's a lot of greenwashing out there.

[Megan Lawton]

That's all coming up on today's Business Daily. It's a cold November day in busy downtown Toronto, where just around the corner from where I am, the city is hosting its annual Sustainable Finance Summit. Adam Scott is one of the many attending. He's executive director of the campaign group Shift Action for Pension wealth and Planet Health. He's kindly stepped out of the conference to meet me for a coffee. Naturally, we start with ethical investing.

[Adam Scott]

There are quite a few people working in the financial sector here in Toronto who care about these issues, who think about them every day. 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.

[Megan Lawton]

We'll come back to Adam's point on the challenges with ethical investing later. First, though, some context.

[Bruce Sellery]

My name is Bruce Sellery and I am the CEO of Credit Canada, which is the oldest nonprofit credit counseling agency in the country. Ethical investing is an investment strategy where your value 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. What is really counter to one person may be totally fine for another. So it involves taking companies out of your portfolio that, for example, might sell tobacco, might manufacture weapons, might produce energy through fossil fuels.

[Megan Lawton]

From a personal perspective, Bruce explains how ethical investing might become something you consider.

[Bruce Sellery]

For an individual investor. You are saving for, you know, many times lots of different things, but in particular, you're saving for your retirement. You're, you're building a nest egg so that when you're no longer drawing a paycheck a couple decades down the road, you've got some money for groceries in your fridge. And the reason you invest is because you want high a return as possible. If you were to put that money into your mattress or put it into a savings account, you would have a 0% return or a 2% return. And if you invest over the long period, you could have a return of 7 or 8%. So obviously that is a significant difference.

[Megan Lawton]

There are already things that we as individuals can do to help the environment and help support certain social causes. So I ask Bruce where ethical investing ranks in that list.

[Bruce Sellery]

Our focus as investors on ES does make a significant difference. And over the course of the last five years, companies really, really paid attention. There were institutional investors which are Those with billions and billions of dollars, like pension funds and sovereign wealth funds, that had made requirements or made demands of companies to change their behavior and improve the way that they engage on those three things, environmental, social and governance. So for sure I believe that that will make a difference.

[Megan Lawton]

What about for businesses? For many, ESG is a framework to assess and improve performance beyond profit, covering things like emissions, how staff and suppliers are treated and how the company is run from board diversity to pay.

[Lindsay Hampson]

So who's reaching out to me is sometimes the head of finance, sometimes the head of hr, sometimes the health and safety person, the OPS person. It's like whoever was just handed the sustainability problem is reaching out for help because they just don't have the bandwidth and the expertise to figure this out.

[Megan Lawton]

Lindsay Hampson has conversations about ESG every day. She's the founder of sustainability consultancy firm this Rock and as her LinkedIn says, a business minded tree hugger.

[Lindsay Hampson]

So when I was a kid, I was super fascinated by the environment. And then I grew up and realized I need to make money. So I got into the corporate world, worked at IBM, SAP, lots of tech companies, and then did my MBA mid career and realized, oh, I think I can marry my passion for the environment and my intellect toward a business doing well. So I jokingly call myself a business minded tree hugger.

[Megan Lawton]

Based in Hamilton, Ontario, Lindsay advises small and medium sized businesses on how to be greener and Rank higher within ESG reporting frameworks.

[Lindsay Hampson]

Over the past three years, I've worked with more than 55 businesses worldwide, which seems crazy right now. And they come to me because they've never really started sustainability before. So thinking about the environment, when big.

[Megan Lawton]

Firms want to attract or keep ethical investors, they often pass those same sustainability demands down their supply chains. That's where smaller companies start to feel it.

[Lindsay Hampson]

Their company usually has nothing to do with the environment, but their largest customer is asking them. So 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. So my customers are the suppliers of these large companies and they have to figure out how to have an environmental policy or they have to suddenly figure out how to measure their emissions, their greenhouse gas emissions. And usually they're googling like, what is that?

[Megan Lawton]

Lindsay says her clients often get caught off guard by requests for detailed ESG data. When a large customer or investor wants proof and they need support gathering it, that's where she steps in.

[Lindsay Hampson]

I always start at the basics. I ask them, do you just pay your energy bills or you have you actually ever tried to reduce your energy consumption? That's such an easy one. Or I say, you know, how many employees do you have, how many locations do you have? So see what I'm getting at right at the beginning, I'm getting at. Let's get some baselines.

[Megan Lawton]

Lindsay argues that sticking to this framework pays off in the long run. She says companies that score well on these measures are less risky and better prepared for uncertainty.

[Lindsay Hampson]

In my opinion, a company that's going to last for a really long time, they, they can't just have blinders on and not look around at what's going on in their community or in their world around them. So it's hard to mistake that the planet is warming up. I mean, it's truly changing. Our supply chains are being shocked, there's crazier weather, there's definitely things happening that can prevent a business from operating business as usual. So the reason it's come up is any business. I don't care if you're a trucking company or you're a law firm or you manufacture toys, you can have blinders on to the world around you. And so you have to be thinking about how the environment may impact you.

[Megan Lawton]

This is Business Daily from the BBC World Service.

[Bruce Sellery]

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[Megan Lawton]

I'm Megan Lawton. Today we're looking at ethical investing. What is it and does it matter? We're back in Toronto's financial district with Adam Scott, executive director of Shift Action for Pension wealth and Planet Health. We're where we last left him, in a cafe just around the corner from the city's Sustainable Finance Summit. When Done correctly, ethical investing offers the potential for long term financial returns and a positive social and environmental impact. But critics say it's hard to tell which funds are genuinely responsible. It's something Adam campaigns on pushing for more transparency in one key area, pension investing.

[Adam Scott]

In the case of the Canada pension plan, they invest better part of a trillion dollars Canadian all over the world in every kind of imaginable investment. And so they're very dependent on the global economy and how it it does over time. And so that's why individuals, we all think, oh well, I'm not a sophisticated investor, I don't have have money in the market. But oftentimes you will get exposed to these global investment funds just by those sorts of circumstances. And that's why the transparency is so key. These people are working for us on our behalf, investing our money for our future, but they often don't provide very high level of information on how they're doing that.

[Megan Lawton]

Transparency is a word that, that keeps coming up when I'm looking at looking into the topic of ethical investing and there's lots of talk about what is transparency, what isn't transparency, and the difficulty with defining what is ethical what is, because there's no real statute. Here's how we define this is ethical, this is not ethical. And there's like a falling into a trap of something called greenwashing, financial greenwashing. For anyone not familiar with that, just describe what that is.

[Adam Scott]

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 because of this increasing pressure to make sure that companies and investments are actually investing in a livable future. We've seen this wave of pressure from companies to say, look how amazing we are, look at all this great investment. So a lot of companies, for example, banks in particular in the last few years came out and said, we are committed to a net zero by 2050 commitment without any real action or attention to doing that. That's actually quite a big commitment. It's an important commitment. So we've seen greenwashing as widespread and rampant and it's 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. And so there's been a lot of work recently to try to combat greenwashing, especially here in Canada. We've had a number of complaints about major institutions. Our largest bank has been accused of greenwashing.

[Megan Lawton]

That's when organizations mislead consumers with the aim of Presenting a more environmentally responsible image.

[Adam Scott]

We've had the government actually pass some regulations, some legislation, legislation to make it harder to greenwash as well, which has been helpful.

[Megan Lawton]

Earlier this year, the Royal bank of Canada, or 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. The bank had previously promised to help direct 500 billion billion into greener projects by 2025. That's around US$360 billion. RBC said it was still committed to responsible investment in its latest sustainability report. And those changes that I mentioned from the government sit alongside guidance from Canada's security regulators, the csa, who reminded investment firms last year that any environmental claims they make must also be backed by evidence.

[Grant Vingo]

We observed it on a fairly widespread basis where there was a lack of clarity around definitions, you know, what specifically was meant, and the guidance was really intended to show that we were paying attention to the issue and that we were imposing stronger standards over the type of evidence and support that the claims would require.

[Megan Lawton]

Grant Vingo is the chair of the Policy Coordination Committee of the Canadian Securities Administrators.

[Grant Vingo]

You know, examples that we would potentially see that we did see included examples where a fund would be described as an ESG fund. But when we delved into the actual investment processes, it wasn't as central to their decision making process as the title would suggest.

[Megan Lawton]

Grant says the CSA takes greenwashing seriously and they're going further than just issuing guidance.

[Grant Vingo]

We have an active enforcement program and would investigate any more egregious or persistent examples of greenwashing or other types of disclosure errors or misleading disclosures in the ESG space because it's just unfair to the investing public to help have, you know, that type of confusion and misleading statements when their life savings are at stake.

[Megan Lawton]

Though he warns, there is still some ambiguity on certain words.

[Grant Vingo]

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.

[Megan Lawton]

Grant makes the point that those labels can mean almost anything. For sustainability consultant Lindsay Hampson, the simplest way to assess them is to check what's measurable.

[Lindsay Hampson]

Okay, this is my favorite quote. If you can't measure it, it's probably marketing. If I can't see their baseline data on how much energy they consumed last year or their actions toward reduction of water consumption or packaging, then it's probably marketing. I mean, how easy is it right now to take a little green leaf and add it to a company's logo. It's so easy, right?

[Megan Lawton]

But while ESG is gaining momentum in some places, including here in Canada, elsewhere that trend is in decline.

[Bruce Sellery]

Yeah, this is extremely significant. The EPA under Administrator Lee Zeldin announced a flurry of actions yesterday, around 31 actions seeking to roll back key environmental regulations.

[Megan Lawton]

Since returning to office, the Trump administration has rolled back climate and diversity policies in the United States. President Donald Trump has long argued that climate regulations stifle economic growth, including rules.

[Bruce Sellery]

On poll from coal, power plants, electric vehicles, air quality standards.

[Megan Lawton]

These rollbacks are having a knock on effect on the way some companies approach esg. As Bruce Sellery, CEO of Credit Canada.

[Bruce Sellery]

Explains, given the political times that we're in, it is way less palatable for companies to talk publicly about their equity, diversity and inclusion efforts. This is the S of esg, the companies who have a real commitment to diversity, equity and inclusion. In the US There have been a lot of negative comments about edi.

[Megan Lawton]

That's equity, diversity and inclusion, known in the US as dei.

[Bruce Sellery]

There have been some regulatory changes on edi, so some companies are either removing those policies entirely or reducing their focus on those policies because of regulation or because of the the blowback that they're receiving from political leaders.

[Megan Lawton]

There's with some companies scaling back on ESG commitments, I ask Bruce how this impacts investors and their money.

[Bruce Sellery]

It could well be that those investments that they have put their hard earned money in don't return what they had hoped they would return. Listen, it could be that some of them fail and that's that's the game of investing. You earn a you have the potential for a higher reward, but you are also taking higher risk.

[Megan Lawton]

Thank you to Bruce and all of my guests. You've been listening to Business Daily on the BBC World Service with me, Megan Lawton. This episode was produced by Sam Grouet. You can find more episodes wherever you get your BBC podcasts.

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