Shropshire Business Talk: New Greenwashing Regulation

A recent survey has revealed that the majority of investors would like their money to be used for good causes.

A survey by Financial Lives found that 81% of adults surveyed would like the way their money is invested to do some good as well as provide a financial return. 76% would like to invest in a way that protects the environment.

And 74% would like to invest in a way that has a positive social impact.

According to previous research by the Financial Conduct Authority in 2021, more than 70 per cent of people wanted to invest in a way that protects the environment. The same percentage would not put money into investments which are unethical.

It is believed that some providers were previously badging funds as ethical or sustainably focused when actually the underlying investments are little different from similar mainstream funds that they manage. This became known as ‘Greenwashing.’

Greenwashing comes in many forms, but in terms of fund management it is when investment managers badge funds as green when the underlying investments are not as green as they claim.

Now, new anti-greenwashing rules and Sustainability Disclosure Requirements (SDR) have been implemented in the UK by FCA. They affect all firms in different ways, including advisers. Ignoring the new requirements is not an option.

The new anti-greenwashing rule came into effect in May. It applies to all FCA authorised firms who make sustainability-related claims about products and services.

This requires all firms to be able to substantiate any sustainability related claims they make in relation to products and services. All firms will need to review their communications and financial promotions for references to sustainability.

Taking the time to look at how your money is affecting the planet and making decisions based on that can make a real difference.

For pensions, insurance, mortgages and investment advice contact the team at Significant Financial Advisers on 01588 673483.