Savers and investors cite greenwashing as a barrier to investing, as data reveals misalignment in sustainable classifications
9 Aug, 2022
Press release
New research from Boring Money reveals that:
Greenwashing remains the major barrier for both consumers and advisers
A quarter of investors (25%) and nearly a quarter of savers who would consider investing (24%), report being worried about greenwashing when it comes to choosing to invest sustainably
46% of advisers say transparency and the ability to analyse and compare funds is a barrier to writing a more sustainable business, compared to 42% in 2021
According to Boring Money’s Sustainable Investing Report published in September 2022, investors report that the biggest barrier they face is fear of greenwashing. This is reported for investors of all confidence levels. Additionally, male investors (29%) are significantly more likely to cite greenwashing as a barrier than female investors (19%).
Investors are becoming more concerned about investing in companies associated with areas of concern or “sin stocks”. Considering the global events of 2022 so far, it is no surprise that weapons and fossil fuels came under the spotlight. However, Morningstar’s “Employs Exclusion” methodology, reveals a significant mismatch between expectations – what investors want to exclude – and reality - the proportion of funds in Article 8 and 9 that do exclude these categories.
On the opposite side of the spectrum, an impact approach is now preferred over a sustainable investment option. Renewable energy is the preferred impact theme, with 57% of investors saying this would encourage them to invest. However, only a small fraction of Article 8 and 9 funds have their portfolios aligned to the United Nations’ Sustainable Development Goals.
Boring Money CEO Holly Mackay comments:
“Greenwashing is a threat to the adoption of sustainable investing. Our research reveals an enormous disconnect between investors’ expectations, and the reality of what lies under the bonnet of most sustainable funds, which is perhaps unfairly fuelling some perceptions of greenwashing. There is a lot of work to be done to help investors understand the reality – and limitations too – of what is available today.”
Anastasia Georgiou, Head of Adviser Solutions, EMEA at Morningstar comments:
“There is not a one-size fits all when it comes to sustainable investing. It is multi-faceted, and covers a broad range of approaches. As investors have different priorities, it is the role of the adviser to ensure that the investment approach is aligned – and the right exclusions are made."
“Non-advised retail investors will need to make sure they fully understand what they are investing in. Not an easy task with so many different approaches to sustainable investing, the key will be to match the right data to the approach taken.”
