(Bloomberg) -- Som Seif, the entrepreneur bent on disrupting Canada’s financial industry, has found himself at the center of an unprecedented showdown with the country’s top markets watchdog. The asset management executive is a consummate marketer — a skill that helped him build a firm that was one of Canada’s early winners in exchange-traded funds, sell it to BlackRock Inc., then start another, Purpose Investments Inc.  But that knack for self-promotion has caught the attention of the Ontario Securities ...

Som Seif, the entrepreneur bent on disrupting Canada’s financial industry, has found himself at the center of an unprecedented showdown with the country’s top markets watchdog over greenwashing claims https://t.co/PzKPt6V7DS ...

Market Trends - The carbon credits market is quietly staging a comeback after facing allegations of greenwashing a few years ago [1]

Core Insights - The current sentiment among investors is mixed, with some feeling pessimistic due to geopolitical dynamics and climate risks, while others see opportunities for investment in climate adaptation and resilience [2][9][10] Climate Change and Investment - Global warming is projected to reach 3.6 degrees Celsius by the end of the century if current trends continue, highlighting the urgency of addressing climate risks [3] - Despite rising absolute emissions, carbon intensity has decreased by 20% for global indices last year, indicating a shift towards corporate climate objectives, especially in Europe where over 60% of market capitalization is aligned with climate goals [6][7] Geopolitical Dynamics - Geopolitical tensions, particularly between the US and other regions like Europe and China, are influencing energy policies and investment strategies, with a focus on energy self-sufficiency and national security [14][16][19] - The shift in US political sentiment regarding climate change has created uncertainty for investors, particularly those reliant on current policies [13][9] Market Trends and Opportunities - There is a growing recognition of the need for strategic autonomy in energy, which is driving investment allocation towards climate objectives and industrial plans [8] - The demand for transparency in asset management is increasing, with institutional investors seeking alignment with sustainability credentials of asset managers [22][25] Physical Risk and Adaptation - Physical climate risks are becoming a major concern for investors, affecting insurance rates and prompting discussions on resilience and adaptation strategies [46][49] - The conversation around adaptation financing is still in early stages, but there is potential for private capital to be allocated alongside public funding to address these challenges [51][54] Conclusion - The complexity of climate-related investment requires a nuanced understanding of both physical risks and geopolitical factors, with a focus on long-term strategies rather than short-term gains [35][40][41]

Core Insights - 82% of organizations plan to increase investment in environmental sustainability over the next 12–18 months as a core strategy for future-proofing [1] - Three-quarters of organizations view sustainability as essential for long-term competitiveness, innovation, and resilience, despite a gap between perceived preparedness and actual resilience [1][2] - Compliance with regulations is the primary driver for sustainability initiatives, followed by business value factors such as profitability and operational efficiency [2] Investment Trends - More than 80% of organizations are increasing their sustainability investments, an increase of 8 percentage points from the previous year [2] - Only 21% of organizations have developed detailed transition plans with interim targets and capital allocation, indicating a lack of concrete action [2] Climate Impact and Preparedness - Over 70% of executives report supply chain disruptions due to climate impacts, with many feeling underprepared for climate change effects [3] - Only 38% of organizations are upgrading infrastructure, 31% are shifting production to less climate-vulnerable regions, and 26% are redesigning products [3] Business Value and Leadership Perspectives - Business leaders recognize sustainability as a core driver of business value, but many face challenges due to global uncertainty and budget constraints [4] - There is a call for a pragmatic approach to implement concrete transition and adaptation measures to build resilience and foster innovation [4] AI and Sustainability - Nearly two-thirds of executives report using AI to support sustainability goals, but there is growing concern about the environmental impact of generative AI [5] - The belief that the benefits of generative AI outweigh its environmental costs has decreased from 67% in 2024 to 57% in 2025 [5] Consumer Sentiment - Consumer skepticism is rising, with 62% believing companies engage in greenwashing, up from a third in 2023 [6] - More than 75% of consumers feel corporations should do more to reduce greenhouse gas emissions, highlighting the need for transparent sustainability communication [6]

Core Viewpoint - The Ontario Securities Commission (OSC) is taking enforcement action against Purpose Investments Inc. for allegedly misleading claims regarding its incorporation of environmental, social, and governance (ESG) factors in its investment processes [1][3]. Group 1: Allegations and Findings - The OSC alleges that Purpose Investments made misleading statements about its ESG practices between September 2019 and March 2023, claiming to embed ESG principles across its entire investment process [1][2]. - The OSC identified at least 19 instances where Purpose and its founder, Som Seif, marketed their ESG credentials, including on the company's website and in media interviews [2]. - The OSC claims that Purpose did not consider ESG factors in investment decisions for many of its funds and lacked a formal ESG policy [3]. Group 2: Financial Discrepancies - According to the OSC, less than 35% of Purpose's assets under management considered ESG factors in 2019, despite the company claiming that the percentage was 75% [3]. Group 3: Company Response and Context - Purpose Investments is contesting the enforcement action, with a hearing scheduled for October 6 [3]. - Som Seif stated that the OSC's allegations do not indicate investor harm or prospectus violations and that the case is not based on investor complaints [4]. - In 2023, Purpose updated its disclosures to clarify which of its funds were classified as ESG following a request from the OSC [5]. - Seif expressed surprise at the OSC's decision to pursue enforcement action, describing it as targeting something minimal [6][7].

Sustainability Claims & Greenwashing - The industry is seeing a rise in "eco" versions of products with claims of sustainability, but these claims are often superficial and misleading, potentially constituting greenwashing [1] - Companies are applying sustainable claims to products without integrating sustainability into their core business strategy, primarily to maximize profits [1] - Many products labeled as "recyclable" are only potentially recyclable, and the terms "recyclable" and "recycled" are often used interchangeably to confuse consumers [1] - Products marketed as "chemical-free" still contain chemicals, highlighting the misleading nature of such claims [1] - Some companies promoting "conscious" collections have a history of labor exploitation, raising concerns about ethical practices [1] Sustainability & Business Strategy - Companies focused solely on profit are deemed unsustainable in the long term, as consumers will eventually demand genuine sustainability [2] - Businesses should balance profit with the well-being of people and environmental protection, aligning with economic, social, and environmental sustainability [2] - The United Nations' ESG (Environment, Social, and Governance) concept, created in 2004, encourages companies to develop a strategic sustainability plan [2] - A sustainability report is increasingly required for companies to access funding and remain competitive [2] Consumer Action & Alternatives - Consumers are encouraged to question companies and challenge them to integrate sustainability genuinely [2] - Consumers are encouraged to avoid purchasing products labeled as "eco-friendly" that lack transparency and third-party certifications [2] - Sustainable solutions, though currently representing a small market share, are becoming more accessible and are often priced similarly to traditional products [2][3] - The cost of environmental damage and health issues far outweighs the perceived higher cost of sustainable alternatives [3]

Environmental Concerns - Canadian fossil fuel companies Cenovus and Enbridge face a greenwashing complaint [1]

Regulatory Scrutiny & Improvement - UK's Financial Conduct Authority (FCA) previously warned of greenwashing risks in sustainability-linked loans [1] - Banks and borrowers have seemingly made significant improvements in addressing greenwashing concerns [1] Sustainability-Linked Loans - The report focuses on the market for sustainability-linked loans [1]

Climate Action - Companies are shifting from "greenwashing" (making empty promises) to "greenhushing" (decarbonizing quietly) [1] - Companies are focusing on decarbonization efforts without public fanfare [1]